Oil prices rebounded in European session as Qaddadi's troops recaptured a key oil port, dampening hopes that the unrest will end soon. The front-month contract for WTI crude oil price climbed above 105 while equivalent Brent crude contract jumped a 2-week high of 116.78. The DOE/EIA said in a report that the extent and duration of Libya's supply disruption will depend on several factors: 1) Much will depend on the political outcome and the acceptance of the government in power by both the Libyan people and the international community following the end of hostilities; 2) sanctions would need to be lifted to allow for international participation (both in terms of investment and trade) in Libya's oil sector and 3) following commercial and contractual negotiations, any infrastructure that has been damaged will have to be repaired and the knowledge base will have to return to the country before production can begin to ramp up. The oil agency said large uncertainties remain in the oil market.
In the report, the agency also compares changes in crude oil production from pre-disruption level among 4 OPEC countries. It appears that only Kuwait's oil production managed to exceed pre-disruption levels after the invasion by Iraq in 1990. For Venezuela, Iran and Iraq, a large amount of output lost during crises proved to be permanent.
In the report, the agency also compares changes in crude oil production from pre-disruption level among 4 OPEC countries. It appears that only Kuwait's oil production managed to exceed pre-disruption levels after the invasion by Iraq in 1990. For Venezuela, Iran and Iraq, a large amount of output lost during crises proved to be permanent.
Gold prices remained firm with the benchmark Comex contract extending gains to 1430. IEA's forecast that oil revenue to the OPEC may rise to $1 trillion this year will help gold. Apart from rising inflation pressures, higher oil prices boost commodity indices which usually weigh energy more heavily than gold. Fund managers will have to raise their gold purchases as the indices are moved higher. This helps lift gold prices. Moreover, as a major gold buyer after China, India and the US, surging oil revenues may boost gold buying in Middle East countries.
On the macro front, US' initial jobless claims probably fell -2K to 380K in the week ended March 26. Separately, the Chicago PMI is expected to have slipped to 69 in March from 71.2 in the prior month. Indeed, the focus this week is the March employment report which will be released on Friday. Non-farm payrolls might have increased 190K, easing from 192K in February, while unemployment rate should remain steady at 8.9% during the month. In the Eurozone, the market is awaiting the stress test result for 4 Irish banks. It's likely that all of them will be nationalized- to come under control by the state.
On the macro front, US' initial jobless claims probably fell -2K to 380K in the week ended March 26. Separately, the Chicago PMI is expected to have slipped to 69 in March from 71.2 in the prior month. Indeed, the focus this week is the March employment report which will be released on Friday. Non-farm payrolls might have increased 190K, easing from 192K in February, while unemployment rate should remain steady at 8.9% during the month. In the Eurozone, the market is awaiting the stress test result for 4 Irish banks. It's likely that all of them will be nationalized- to come under control by the state.
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