A Review of the Nigerian Energy Industry

Brent up again

Libyan rebels 227 May 2014, News Wires – Brent crude rose towards $111 per barrel on Tuesday amid supply disruption worries as Ukraine launched air strikes to put down a separatist revolt and Libya struggled to rein in rebels.

Heightened geo-political risks have helped Brent gain more than 6% since hitting this year’s low of $103.95 in early April.

Investors are now awaiting a slew of economic indicators from the US and Europe to gauge the demand outlook for oil and assess the benchmarks’ price direction.

Brent crude gained $0.22 to $110.54 per barrel by Tuesday morning, less than $2 away from the high for the year of $112.39. US oil was up $0.03 at $104.38.

“We may not have to wait too long before oil markets spring to life as traders await key data later tonight to get a sense of the appetite of the world’s top consumer,” OptionsXpress market analyst Ben Le Brun told Reuters.

“Right now the market is listless with very, very low volumes traded and supply side issues continuing to weigh on everybody’s minds.”

Geopolitical tensions, however, continued to underpin oil prices.

Ukraine launched air strikes and a paratrooper assault against pro-Russian rebels who seized an airport on Monday, as its newly elected leader rejected any talks with “terrorists” and said a robust military campaign in the east should be able to put down a separatist revolt in “a matter of hours”.

Ukraine is a main gas supply route to Europe from Russia.

In Libya, the leader of the protesters occupying the country’s oil ports said he did not recognise Prime Minister Ahmed Maiteeq’s new government and suggested a previously agreed deal to end his blockade could be in jeopardy.

Oil, particularly Brent, also drew support from demand growth hopes amid expectations the European Central Bank (ECB) is preparing a package of policy options to offer some stimulus for the euro zone economy.

Le Brun said any policy measures announced in the euro zone should have a positive impact on Brent and West Texas Intermediate.

Investors are watching progress of ongoing talks between Iran and world powers to find a solution to Tehran’s controversial nuclear programme.

Iran said that world powers were “demanding too much” in negotiations aimed at reaching a deal by a July deadline, but hurdles could be overcome.

Foreign Minister Mohammad Javad Zarif said a compromise was still possible despite the difficulties.

Brent faces resistance at $110.99 per barrel and may retrace to support at $109.41, while US oil looks exhausted while approaching a resistance zone of $104.50 to $104.99, according to Reuters technical analyst Wang Tao.

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