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Trends

Rotterdam: $ 1 higher
Singapore: $ 5 lower
US Gulf: $ 1 higher

South Sudan expects production to resume soon (Brent: $112.3)

South Sudan expects production to start flowing within the next 3 months. Oil Minister Sthephen Dhieu Dau: "Foreign oil companies …..are hereby ordered and instructed forthwith to recommence and re-establish the production of crude oil". Whilst foreign oil companies will surely consider the security issue for their oil workers, an estimate of 3 months seems plausible. The return to full production of 350,000 bpd will likely take longer but approximately 50% of pre-war levels does not seem far-fetched.

Change of guards at the oil prop-desks?

The CEO of a large American bank is publicly hinting that the bank might sell its commodity arm. Under the Dodd-Frank Act and the Volcker rule, investment banks will have a very hard time operating with a properiatory trading desk (aka. taking own positions). In the background high-cash investors are ready to strike at favorable offers. Qatar Prime Minster Sheikh bin Jassim al-Thani had shown interest in this particular deal, but needed a few more weeks to dive into the books, before committing to anything. Should potential new owners of the prop desk impose different guidelines for the traders, it will have a direct effect on oil price behaviour.

Recommendation

The U.S. election can bring outliers in price, which clients are advised to take advantage of. Meanwhile the supply-demand situation is walking a tightrope, and the geopolitical nuclear wildcard in the Middle East remains. Given the scarce inventory levels, and the ongoing maintenance season for refineries, consumers of distillates are strongly advised to consider hedging for the upcoming winter.