The Week In Hindsight 28 March 2014
A strong upwards trend exerted itself upon major oil benchmarks this week following a month long period of losses. WTI broke back above the $100 p/b mark on reports that inventories in Cushing, Oklahoma had fallen to a two year low, as Bureau of Economic Analysis data showed US consumer spending rose faster than expected during February. Both of these have positive demand implications for WTI over the coming weeks and should serve to support prices above the $100 mark.
Brent Crude also staged a recovery following several consecutive weeks of losses. The European benchmark was driven higher by ongoing supply concerns as Libyan production hit new lows on the back of the continued dispute between militant groups and government over the dispersion of oil wealth in the country. The benchmark broke above the $107 p/b mark and appeared on Friday to be positioning for further gains next week.
In addition to ongoing disruption in Libya, continuing discussions over the potential for further sanctions against Russia also have the potential to support prices at or around current levels as any further measures are likely to target the nation’s energy sector. Given that Russia supplies a large portion of European energy, the impact of restrictions upon imports from the country would be significant for prices.