Strategic Briefing | 3.20.12 | Oil Prices

Oil Drops From Three-Week High on Speculation of Rising Supplies
Bloomberg | Mar 20
Oil dropped from the highest price in almost three weeks in New York on signs U.S. crude supply is rising and speculation that Saudi Arabia may boost output…. “The market is currently well-supplied with oil, but supply disruptions and looming supply shortage from Iran is keeping uncertainty high,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG (RBI) in Vienna who predicts U.S. futures will average $104 this year. “Without an intensifying Iran conflict, further price gains aren’t justified.”

U.S. crude oil imports drop to lowest level since 1999 as domestic oil production rises
US Energy Information Administration | Mar 19
U.S. crude oil imports during 2011 fell to their lowest level in twelve years and were down 12% from their peak in 2005, as higher domestic oil production and decreased consumption of petroleum products reduced American refiners’ purchases of foreign crude.
Oil falls from close to 10-month high to near $107
Associated Press | Mar 20
Tensions over Iran’s nuclear program have helped to keep high prices at elevated levels. A military attack by Israel or the U.S. against Iran’s nuclear facilities would likely trigger a crude price spike while renewed diplomatic negotiations would probably cause prices to drop. “The market is anticipating additional favorable U.S. economic news,” energy trader and consultant Ritterbusch and Associates said in a report. “And until concerns ease regarding Iranian risk, the market appears capable of maintaining price gains, especially if equities remain strong.”
Is oil the new Greece?
CNN | Mar 20
As gas prices rise, due largely to fears that tensions with Iran will cut off supply, is oil set to become the new Greece? The chief economist at HSBC thinks so. Much like worries of the eurozone debt woes could weigh on the global economy, now rising oil prices are attracting similar attention. “If they continue rising, they really choke off consumer spending,” HSBC’s Stephen King told Quest Means Business. “We’re not talking about recession here, but we’re talking the growth rate which is quite strong could fade during the course of this year.”
Saudi Arabia sends tankers to US with pledge to bring down oil price
The Telegraph | Mar 20
Saudi Arabia has pledged to take action to lower the high price of oil, which has risen to around $125 a barrel, with laden supertankers set to arrive in the US in the coming weeks.
Oil slips towards $124 on Saudi, Libya supplies
Reuters | Mar 20
Brent crude fell towards $124 a barrel on Tuesday as signs of increased supply from Saudi Arabia and a return to pre-war exports from Libya eased pressure on the market, while a slowdown in Chinese demand and a stronger dollar also weighed. Saudi Arabia has said it stands ready to fill in for any gap created by the loss of Iranian oil, and late on Monday said it would work to return oil prices to “fair” levels, according to a state news agency. Supply concerns were also eased by Libya, where oil exports in April are set to exceed pre-war levels, according to a senior official at its National Oil Corporation.
Templeton’s Mobius bets on further oil price increases
Reuters | Mar 20
Franklin Templeton funds that focus on developing economies are heavily invested in energy stocks as the firm believes oil prices have room to increase further, the head of its emerging markets group Mark Mobius said on Tuesday. “If you look at inflation and the oil price over the long term, you’ll find that the oil prices have not kept up with inflation, so there’s some catch-up to do,” Mobius told a news conference…. As for China, he said he was confident about its continued prospects despite signs of slowing economic growth and worries among some investors that the world’s second-largest economy is headed for a hard landing. “People ask me if China is going to have a hard or soft landing. I tell them China is not landing, they are going to continue flying,” he said.
Energy crisis only joke to Obama
Boston Herald | Mar 20
President Barack Obama’s shtick on energy is getting old. The latest version in response to rising gasoline prices goes something like this: He can’t really do anything about high gasoline prices…. According to the first part of his shtick, high gasoline prices are not his fault; they result from high crude oil prices driven by geopolitical forces — Middle East instability and increased demand by China and India…. But wait. He has done something about high oil prices . . . by drilling more! In the second part of his routine, touted in a new White House report on energy security, he assures us that the United States is producing more oil today than at any time in the last eight years. In addition, he said, he is all about opening new areas in the Arctic Ocean and the Gulf of Mexico to exploration. The problem with this claim is that most of the expansion in domestic oil and gas production over the past three years is the result of steps taken by the Bush administration. Obama has actually reduced output from what it would have been had his administration not reversed many of President George W. Bush’s policies.