Oil from Libya cannot be overly relied on

Crude

Rising tensions in Ukraine have so far overshadowed mixed news from Libya and the price of Brent (ICE) hit a six-week high on Monday. Apart from events in Ukraine, stronger than expected March US retail sales have supported the price of oil yesterday.

Regarding Libya, Reuters reported yesterday that despite a deal between government and rebels was reached on unblocking ports that had been under rebel’s control, the port of Zueitina – one of the major ports in the eastern part of the country which used to load about 200 thousand barrels of oil per day – is still not under control of Libya’s government.

Let us recall that Libya is important source of oil mainly from the perspective of Mediterranean refineries that should be gradually returning from a seasonal maintenance in weeks to come and prospective increase of exports from Libya could therefore help to ease the pressure on oil price. On the other hand, yesterday’s news suggests that oil from Libya cannot be overly relied on.

Base Metals

The recent events in Ukraine which could spark a military action against pro-Russian rebels (its likelihood has been steadily rising) supported nickel price on Monday. The metal hit a fourteen-month high yesterday as markets worry about tightening of western sanctions against Russia, which is the major producer of the metal (its refineries account for about 15% of World capacity).

Let us recall that tensions between the West and Russia are not the only source of nickel’s strength this year. The price has been supported by Indonesia’s new export rules imposed on mineral ores which could turn the market balance from last year’s surplus to a small deficit this year.

Chart of the day:

Money managers boosted their net long position in WTI futures last week by cutting their short positions.