Early last week WTI was approaching US$48 per barrel, but the index’s day in the sun was short-lived and the clouds quickly moved in: WTI closed the week below US$45/barrel.
- A major strike by Petrobras (N:PZE) employees and the temporary closing of an export terminal in Libya made the price of oil jump $1.60. In the U.S., excellent employment data released on Friday raised expectations that the Federal Reserve will be hiking interest rates sooner rather than later, and this had a chilling effect on crude oil, making it less attractive on international markets.
- Uncertainties surround any sense of where oil prices are headed. The market was depressed on news that crude-oil stocks had increased 2.847 million barrels, as reported last week by the Department of Energy (DOE). The fact that hurricane season is coming to an end will not help, either: the market has largely priced in the risk premium for any potential disturbances.
- On the other hand, according to the same DOE report gasoline inventories were down 3.3 million barrels, and Baker Hughes (N:BHI) reported that the number of active drilling rigs in the U.S. had fallen again, by 6 rigs to 572. There are also other events to consider, such as the crash of a Russian plane in the Sinai Peninsula, which will inevitably exacerbate tensions between hostile groups in this region, which produces one third of the world’s daily output of crude.
Mathieu Tessier