As the military stalemate continues in Libya, production there has ground down to zero. The Saudis seem unable to make up the shortfall to make good on their promise. In the meantime, Nigeria and Algeria are having political problems that place their production in jeopardy. There are two contradictory forces at work here, the oversupply in the U.S. that the Cushing terminals so vividly indicate with every weekly report and the instability of Middle Eastern supply that the Brent premium denotes.
There's a general feeling that prices are too high for the demand and supply. Even technical analysts are saying that their numbers don't point to higher prices. Yet prices seem to inexorably rise and the war risk premium is what fuels the increases. However, with global demand weaker than expected, it is hard to justify prices that recall 2008's heights.
Today, WTI +60¢, $108.54; Brent +$2.47, $121.16; RBOB +1.48¢, $3.1661; HO +3.55¢, $3.171.
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