Welcome to OilEnergyMoney. After an unnerving brush with $109 a barrel, the first post starts on a positive note with all indicators pointing to further falls in the price of petroleum.
Due to a bomb placed at the 42-inch Zubair 1 Pipeline in Basra, oil hit $107 on Thursday. Fears that disruptions would continue in to next week were placated on Friday by technicians reporting significant progress on repairs. This, coupled with the American bombing of Basra to support Iraqi forces led to an increase in confidence of the oil rich region’s stability. By Friday, prices fell to $105.62.
While TNK-BP troubles escalated with BP pulling employees out of Russia due to ‘Visa concerns’ earlier this week, the announcement of a possible oil tax cut provided relief for Russian oil companies. Tuesday’s proposed $4.2 billion dollar cut should help companies retain higher margins from soaring prices, which had previously been siphoned to Government funds. Higher profits should free up firms to explore riskier fields and increase supply, good news for investors and consumers. LUKOil, Russia’s largest oil company saw its shares rise by 12.3%
After falling for five consecutive days to lows close to its IPO price, PetroChina shares gained 5.2% on the back of general market speculation that China will soon launch stock index futures. The boost also helped the banking sector and the Shanghai Composite Index finished up 2.57% up at 3499.17.
The general optimism in equities and oil supplies led to a further drop over the weekend to $104.59. We predict $102 or below by Friday.
Looking ahead for the week starting 31st March, disruption caused by the Zimbabwe elections may disrupt South African oil production, Basra should stabilise after influential Shiite cleric Muqtada al-Sadr called on followers to cease fighting. In general finance, Lehman Brothers seeks to sue LTT-Bio-Pharma for reneging on $350 million of secured loans.
At OEM we hope to keep you updated daily on the movers and shakers of oil, energy and finance. Please comment frequently and honestly, we look forward to your views and hope you look forward to ours.
One Barrel of Sweet and Light on NYMEX At the Time Of Writing: $104.59
