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Trends

Rotterdam (ARA) fuel oil - Trading USD 3 lower

Singapore fuel oil - Trading USD 3 lower

US Gulf fuel oil - Expected to open USD 5 lower

Oil prices dropping (Brent: $114.98)

Secretary-general Rasmussen has informed that NATO will be in charge of operations in Libya. Although the responsibility is now on NATO-shoulders, ¼ of the costs are still covered by the US - not counting the 100% own funding of US deployed troops. So, even though this will prevent a "copy-paste" of Iraq/Afghanistan, we still expect massive pressure from the US to end the turmoil quickly.

The statement: "we do not support the rebels, we entered to protect the civilians" is somehow offset by the massive bombing and removal of any military buildings/vehicles/persons connected with Colonel Qaddafi. Protestors will only have to throw the curling stone and NATO will sweep the way to victory.

Anti-Qaddafi forces have now re-taken many eastern oil fields, and produce approximately 100.00 barrels per day out of an estimated 300.000 bpd.

Recommendation

We recommend consumers of oil to secure new hedges - perhaps with a put option below to secure liquidity risk. Options in general are advisable in this volatile environment.

In addition we recommend hedging the price difference between fuel/gasoil and crude oil as a direct result of the nuclear disaster in Japan.