Ghaddafi's forces have taken over the oil port city of Ras Lanuf and the dollar fell in trading versus the euro causing crude and products to increase significantly. Today's prices are the highest since the summer of 2008 and there is no end in sight for the Libyan fighting and Middle Eastern unrest. The QE2 has devalued the dollar and currency experts believe that the dollar is overvalued. Since the dollar is the denomination of choice for crude, its devaluation will be balanced by a rise in commodity prices including oil. Demand for products is also being forecast to increase with the summer driving season set to start in two months.
For the month, WTI +$9.66(+10%), $106.72; Brent +$5.34(+4.8%), $117.36; gasoline +37.75¢(+13.8%), $3.1076; distillate +16.18¢(+5.5%), $3.0898.
Thursday, March 31, 2011
Tuesday, March 29, 2011
march 29, 2011
The political situation in Libya remains unsettled as both Ghaddafi and the rebels are intent on continuing the struggle towards a victorious end and only one side can win. The longer the struggle continues, the more cracks appear in other governments such as Syria, Yemen, and Bahrain. Of course, the biggest problem for world markets would be if troubles were to surface in Saudi Arabia but so far the Kingdom has shown both its largesse towards the greater population as well as armed strength and that has left the opposition unable to bring greater numbers of demonstrators to anhy public place.
The U.S. economy seems to be improving as the equities markets is on the rebound but inventories have been building and that indicates weaker than expected demand.
Japan, the world's third largest economy, is still trying to grapple with the looming nuclear disaster at the Fukushima Dai Ichi power plant. News that there was a major plutonium leak at the plant cannot make recovery efforts move forward and the economy with it.
With all these world events in mind, the biggest contributor to the pricing equation is the Middle East risk premium. Today, WTI +80¢, $104.78; Brent +47¢, $115.27; gasoline +2.25¢, $3.0458; distillate +1.98¢, $3.0415.
The U.S. economy seems to be improving as the equities markets is on the rebound but inventories have been building and that indicates weaker than expected demand.
Japan, the world's third largest economy, is still trying to grapple with the looming nuclear disaster at the Fukushima Dai Ichi power plant. News that there was a major plutonium leak at the plant cannot make recovery efforts move forward and the economy with it.
With all these world events in mind, the biggest contributor to the pricing equation is the Middle East risk premium. Today, WTI +80¢, $104.78; Brent +47¢, $115.27; gasoline +2.25¢, $3.0458; distillate +1.98¢, $3.0415.
Monday, March 28, 2011
March 28, 2011
NATO's air forces have effectively changed the momentum of the Libyan Civil War against Ghaddafi in favor of the rebels. There was news today that the rebels could begin exporting production in a week. This positive, for greater supply, news led to a fall in both crudes and both products. There has been a feeling among analysts that prices are a bit high for the weaker than expected global demand and because of the considerable supply around the globe, especially in the bench mark storage point in Cushing. The risk premium will not yet disappear but there is strong indication that prices are too high for the fundamentals.
Today: WTI -$1.42, $103.40; Brent -79¢, $114.80; gasoline -2.12¢, $3.0233; distillate -2.3¢, $3.217.
Today: WTI -$1.42, $103.40; Brent -79¢, $114.80; gasoline -2.12¢, $3.0233; distillate -2.3¢, $3.217.
Thursday, March 24, 2011
March 24, 2011
PIGS and their debt issues have not factored into the price of oil for so long but today news that Portugal needed to be bailed out of its sovereign debt problem restrained prices. Also restraining prices was the news that the orders for durable goods had decreased meaning that the economy might be slowing down and demand for oil may not increase. The fallback in prices was tempered by the continuing violence in Libya. Deaths in Syria were also reported and there is word that Yemen's president and the top army general were negotiating their resignation.
Today, WTI -17¢, $105.58; Brent +22¢, $115.76; gasoline +2.47¢, $3.0459; distillate +0.68¢, $3.0629.
Today, WTI -17¢, $105.58; Brent +22¢, $115.76; gasoline +2.47¢, $3.0459; distillate +0.68¢, $3.0629.
Wednesday, March 23, 2011
March 23, 2011
Rather than calm the waters, the no-fly zone set up by the U.S. and its allies and the bombing of pro-government forces have caused crude prices to rise even higher amid expectations of greater civil unrest elsewhere in the Middle East. Supply is not the problem and is not the problem in the foreseeable future. Crude inventories continue to build while gasoline had a larger than expected draw and distillate was flat in today's EIA report. Ever since political unrest drove out the regimes in Tunisia and Egypt, the market has been skittish about the political problem spilling out onto Saudi Arabia. The market knows that these high prices may not be sustainable but clearly is worried about being surprised by the fall of a pro-Western supplier such as Saudi Arabia.
Today: WTI +$1.29, $105.75; Brent -15¢, $115.54; gasoline +1.61¢, $3.0212; distillate -1.9¢, $3.0561.
Today: WTI +$1.29, $105.75; Brent -15¢, $115.54; gasoline +1.61¢, $3.0212; distillate -1.9¢, $3.0561.
Tuesday, March 22, 2011
March 22, 2011
Certain Japanese recovery with additional demand for oil and the continuing battle in Libya led NYMEX prices up in light trading. Brent and both products followed suit. The renewed fighting despite the no-fly zone indicates that there will be little if any flow of crude out of Libya any time soon. Meanwhile, the problems for the Yemeni regime continue to grow as generals have now defected to the opposition. This fighting raise the risk premium because of Saudi Arabia's proximity to Yemen.
Today, WTI +$2.06, $104.46; Brent +75¢, $115.69; gasoline +0.77¢, $3.0051; distillate +2.33¢, $3.0751.
Today, WTI +$2.06, $104.46; Brent +75¢, $115.69; gasoline +0.77¢, $3.0051; distillate +2.33¢, $3.0751.
Friday, March 18, 2011
March 18, 2011
Some analysts are beginning to believe the Tokyo Electric Power Co. (Tepco) that they are making progress and starting to cool down the Fukushima nuclear reactors because yesterday most of the market's attention was turned towards Libya and Bahrain. Ghaddafi continues to bomb his own people, however, today he unilaterally declared a cease-fire after Britain announced that it would deploy planes to stop Ghaddafi from bombing rebel positions and civilians. Bahrain also continues to be problematic as the Shia continue to demonstrate against the Sunni regime despite the deployment of Saudi and other Gulf State forces in support of the Bahraini government.
All these events have led to a resurgence of the risk premium. The potential for a quick Japanese economic recovery will lead to greater mid- and long term demand for oil as it is likely that Japan will turn to oil-fired power plants to generate electic power. The Libyan crisis, even if Ghaddafi returns to power, will likely take its toll on future production. The continued Shia turbulence in Bahrain and Saudi Arabia will raise the likelihood of greater violence and instability in the region.
Yesterday: WTI +$3.35, $101.33; Brent +$4.03, $114.72; gasoline +10.18¢, $2.946; distillate +6.26¢, $3.0592.
All these events have led to a resurgence of the risk premium. The potential for a quick Japanese economic recovery will lead to greater mid- and long term demand for oil as it is likely that Japan will turn to oil-fired power plants to generate electic power. The Libyan crisis, even if Ghaddafi returns to power, will likely take its toll on future production. The continued Shia turbulence in Bahrain and Saudi Arabia will raise the likelihood of greater violence and instability in the region.
Yesterday: WTI +$3.35, $101.33; Brent +$4.03, $114.72; gasoline +10.18¢, $2.946; distillate +6.26¢, $3.0592.
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