Crude Off Highs; Risk Premium Leaves The Market

0
19

© Reuters.

By Peter Nurse

.com — Oil prices were off the high levels seen over the weekend in early afternoon trading in Europe, but were still trading positively after unrest hit production in two oil exporting countries, Iraq and Libya.

guards shut down production at the 70,000 barrel a day Al Ahdab field in Iraq at the weekend in a protest demanding permanent employment contracts.

Article continues below Advertisement...

At the same time two large production bases in Libya began shutting down after forces loyal to Russian-backed Khalifa Haftar closed a pipeline, in an effort to keep up the pressure on UN-recognized Prime Minister Fayez al Sarrajamid as attempts to end the civil war continue.

“Prior to the blockade, Libya was producing around 1.2MMbbls/d. A prolonged disruption from Libya would be enough to swing the global oil market from surplus to deficit in 1Q20,” said analysts Warren Patterson and Wenyu Yao at ING, in a research note.

OIl prices climbed to the highest levels seen in a week over the weekend, but have since given up some of these gains. By 6:45 AM ET (1345 GMT), were at $58.95 a barrel, up 0.7%, having peaked at $59.73 over the weekend, the highest since Jan. 10. was up 0.8% at $65.36, from a high of $66, the highest since Jan. 9.

Analysts at Platts Analytics noted in a podcast earlier Monday that there was now very little risk premium in the market, and fundamentals warrant to trade around the $65 a barrel level. It would take a substantial hit, such as a sustained disruption to production in Saudi Arabia or southern Iraq, or perhaps the closure of a shipping lane, for a risk premium to enter the market for any length of time.

After all, “the oil market remains well supplied with ample and a healthy spare capacity cushion,” said Stephen Brennock of oil broker PVM, in a Reuters report.

Disclaimer: Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market , meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the , it is one of the riskiest investment forms possible.

Source: Investing.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here