Morning Petrospective – April 4, 2011
rude oil prices jumped to their highest levels in two-and-a-half year and seared through resistance at $107.00, a level that had been the high during a key reversal day early in March. Prices had been trying to get back over that figure for the last three weeks; they finally succeeded on Friday. Gasoline prices preceded them to new recent highs on Thursday. And heating oil prices followed crude by just hours, although heating oil prices did not settle over 113.72, which had been their critical high set earlier in March. All three had breakouts over their critical resistance levels late last week.
Moammar Khadafi’s troops took back almost everything the rebels had gained and were holding a week ago. If we pause to recollect; a week ago the talk in this market centered on the rebels possibly being able to resume oil exports soon. Now, if oil exports start again from Libya, the money will go to Khadafi – at least as of this moment. His troops had retaken roughly 200 miles along the Mediterranean coast and were threatening Benghazi, the rebels’ unofficial ‘capital.’ As the week ended, everything that had been bullish about the Libyan insurgency, at its very inception, was bullish again. The oil is back in Khadafi’s hands and the rebels are back to where they started, effectively.
Oil traders have had plenty of time to incorporate Libya and events in the Middle East into their thinking over the last three weeks. Yemen looks close to regime change and the Assad regime in Syria is working breathlessly to hold the reins of power. Bahrain seemed to be on ‘simmer’ last week, but it could be the most important country of the ones on the brink, given its close geographical position next to Saudi Arabia.
Traders also had March’s unemployment figures to consider on Friday. The Labor Department reported the addition of 216,000 jobs, which was more than the consensus figure of 195,000, according to Dow Jones. The unemployment rate fell to 8.8%, its lowest percentage rate in two years. February employment gains were revised higher, from 192,000 to 194,000. These figures represent improvements, but they are still below the kind of numbers needed to power economic growth rates powerful enough to absorb those entering the workforce and desiring to go back to work. The average work-week was still 34.3 hours long with the average wage averaging $22.87 an hour, unchanged from the figures reported in February.
The Institute for Supply Management’s (ISM) manufacturing index fell to 61.23 in March from 61.4 in February. The median expectation had been for a reading of 61.1, according to a survey conducted by Bloomberg News. China’s index increased for the first time in four months, going from 52.2 to 53.4, and India’s ISM index advanced for its 24th consecutive month to stand at 57.9. Russia’s factory output measure reached its highest figure in five years, touching 55.6, up from 55.2 a month earlier, Bloomberg noted on Friday.
Capital Economics (CE) wrote on Friday that the decline in the US ISM index was “trivial,” and it said that the level of manufacturing is “consistent with GDP growth of more than 5% annualized.” That high a figure will not be seen, though, CE cautioned, because of weak housing and less robust growth in the services sector. CE also warned that disruptions in the supply chain, because of the earthquake in Japan, could cut into future US manufacturing strength. It is not expected to change the underlying arguments for growth.
Brent blend finished at more than $118 on Friday, registering its highest level since August 21, 2008.
FMX Newswire
FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.
Bentek Energy
- Supply/Demand Balance Analytic Report – After Year’s First Net Injections a Return To Withdrawals.
- Industrial End Users Analytic Report – Industrial Demand Continues To Weaken.
- Texas Observer – Texas Demand Remaining on the Mild Side in the Near-Term.
- Power Burn Analytic Report – Power Burn Declines 0.4 Bcf/d Over The Weekend.
Platts Oil
- Kuwait sees $90-$100/barrel as a fair price for oil, the head of state-owned KPC says. Brent crude futures traded at $119.31/b at 1055 GMT.
- The UAE's ADNOC has retroactively raised crude prices by between $8.40 and $8.95/barrel for March.
- Petronas is considering potential partners for its Kepodang gas field in Indonesia, but denied that it plans to withdraw from the project.
- Just how big a threat is piracy to the shipping industry?
Bloomberg
- Oil Rises to 30-Month High on Libya Conflct; Kuwait Says Price Is Too High.
- Tepco to Dump Radioactive Water in Sea to Keep Reactors Stable.
- Zuma’s Quest for India Ties Threatens S. African Power Supply.
- Fukushima Crisis Worse for Atomic Power Than Chernobyl, UBS Says.
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