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Trends

Rotterdam (ARA) fuel oil - Trading USD 4 higher

Singapore fuel oil - Trading USD 9 higher

US Gulf fuel oil - Expected to open USD 1 higher

Iran has imported 1.1m mt of wheat (Brent: USD 120.4)

Seems like Iran has found a way to work around the international bans and imported large amounts of grain from various countries. The bans are imposed to punish Iran for its nuclear program - it does not block firms from selling food to Iran - however, it makes it harder to carry out the international financial transactions needed to pay for it.

The violent unrest continues in Yemen ahead of the presidential election, and a strike has halted output at its largest oilfield, approx. 900,000 barrels so far. So on the one-year day of the revolt in Libya, the world still sees low crude supply. We are approximately 1m bpd in total world supply compared to when everything is hunky dory. Sudan accounting for 450,000 bpd, Libya still missing 500,000 bpd, and issues in Yemen, Nigeria and Kazakhstan all add to the current shortage.

Russia to increase oil export tax by 4.4% for March

With the bans on Iran and general supply difficulties in the Middle East, the Russian oil exports become crucial. With 10.3 million barrels per day on average for 2011 Russia is the world’s largest oil producer. In addition, it has a pipeline system that can supply Iran’s traditional customers in both Europe and Asia. However a higher export tax in a situation where the world is screaming for crude , is not axactly having a bearish effect on prices.

Technical update

Brent prices today are near our expected resistance level of USD 120.5. Should the week close with prices at current levels, we see an increased possibility of an upward trend with new resistance level at around USD 127. We advise clients to use market dips to establish hedges.