| Rotterdam (ARA) fuel oil |
Singapore fuel oil |
US Gulf fuel oil |
| Trading USD 3 higher |
Trading USD 12 higher |
Expected to open USD 2 higher |
Kazakhstan, the new Libya?
After oil workers were laid off in Aktua, they took protesting to the streets. Police response was with live ammunition and has so far resulted in 15 dead. The oil rich state exports roughly the same as pre-war Libya (1.6 million barrels per day). Historically Kazakhstan has been a very stable country, which is why a negative development in this region could lead to concerns over different “stable” countries. With tighter sanctions openly being discussed on Iran, unrest in other major oil producing countries are, debt crisis or not, a potential powder keg for oil prices.
Inventory status before the weekly report later today
Draws on inventories have supported prices further. Later today the official EIA numbers will be published (16.30 CET).
Release: API oil data (Consensus)
Crude: -4,600,000 barrels (-2,300,000)
Distillates: -2,800,000 barrels (-400,000)
Gasoline: -400,000 barrels (1,200,000)
Ay Caramba – risk on, oil up
As the Spanish 3 months’ bond auction proved a great success yesterday it sparked risk on across the globe. US equities ended up 3% and positive momentum across the board. Yields sold at 1.74% versus the 5.11% in November. It seems ECB is no longer the single buyer. Later today ECB will give 36 months’ liquidity to banks should they want it. If banks use that as an arbitrage opportunity to buy more southern European debt for the money from the ECB, it could spark another round of higher prices for risky assets such as oil.
Recommendation
We recommend consumers who have not hedged yet, to use market dips to establish hedges. Scarce holiday liquidity, is giving favorable opportunities. As OPEC will likely support prices around and above 100, we advise consumers to prepare for three digit oil prices on average for 2012.
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