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Trends

Rotterdam: $ 1 lower
Singapore: $ 7 lower
US Gulf: $ 1 lower

World’s biggest poker game continues – oil prices in small setback (Brent: $109.80)

As the Democrats and Republicans try out their best poker faces during budget negotiations, the ante has been upped as the $16 trillion mark is soon reached for U.S. debt. For more than 6 decades the two parties have agreed on a, literally, last-minute deal. We therefore see the outcome that a deal is struck to have the best odds. However, a lot of uncertainty, and thus price volatility, will make headlines until an actual deal is struck.

Latest news reports show that Iran is likely to base its budget for next year on a 1 mbpd export. A major slash in volume, as the nation exported approximately 2.5 mbpd pre-sanctions. In related news, exports to Asia appear to have picked up the pace again after the steep setback immediantly following the 1 July sanctions.

Recommendation

We continue to advise consumers to establish hedges during market dips. Oil prices' immunity to debt news have increased a lot during the financial crisis, whereas the geopolitical risk premium is the major wild card in the weeks and months to come. Disstilate inventories remain at multi year lows. A colder than average winter would significantly increase the chance of higher product prices.