Mid-Week Review

Oil slips from 5-month highs as Russia casts doubt on further output cuts

Oil prices hit fresh five-month highs on Tuesday, supported by concern that violence in Libya could further tighten supply, although Russian comments signaling willingness to pump more dampened the rally. Supply curbs led by OPEC have underpinned a more than 30 percent rally this year for Brent crude, despite downward pressure from fears of an economic slowdown. Russia, a participant in the OPEC-led supply cuts that currently expire in June, signaled on Monday it wanted to raise output when it meets with OPEC because of falling stockpiles. Energy Minister Alexander Novak said on Tuesday there would be no need to extend the supply-curbing deal if the market was expected to be balanced in the second half of the year. Click here to read more from CNBC.

The Security Premium Will Keep Oil Prices High

The fighting in Libya has sent Brent above $70, despite the fact that the fighting is not near the oil fields. But Libya is hardly the only fire heating up oil markets at present. The Trump Administration’s increasing pressure on Iran, including the threat to declare the Revolutionary Guards Corp a terrorist group, has seen the Guards commander warn, “If the U.S. takes this step and endangers our national security we will take reciprocal measures, based on the policies of the Islamic Republic.” Algerian protests are also on traders’ radar, as they could threaten 1.5 mb/d of petroleum supply (including NGLs). Click here to read more from Forbes.

Goldman Says for a Peek into Oil’s Future, Go Back to 1990s

The future of the oil market may resemble the past — specifically the 1990s — according to Goldman Sachs Group Inc. That’s when prices remained steadily in backwardation, a market structure where near-term futures are costlier than later contracts — reflecting tight supplies in the present and ample barrels further out, analysts including Damien Courvalin wrote in an April 8 report. The phenomenon may persist as OPEC exits its current output cuts aimed at averting a global glut, adding supply back to the market in a move that would weigh on long-dated prices, Goldman said. Click here to read more from Bloomberg.

India delays May order for Iran oil, awaits clarity on sanctions waiver: sources

Indian refiners are holding back from ordering Iranian oil for loading in May pending clarity on whether Washington will extend a waiver from U.S. sanctions against the OPEC-member, four sources said. India hopes to get clarity in seven to 10 days on any extension of the waiver, as well as the amount of oil that could be purchased if an extension is given, the sources said. Under the current waiver, India can buy about 300,000 bpd of Iranian oil – about half the amount before the sanctions were imposed – and New Delhi wants to keep buying Iranian oil at that level, Indian sources said last month.  Click here to read more from Reuters.