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.
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