WTI $52.14 +$3.00, Brent $58.12 +$3.17, Diff $5.98 +17c, NG $2.65 -6c
Oil price
Five days is a long time in oil price terms and this Easter much has happened, causing wild fluctuations in the crude price. The Iran nuclear accord and the Saudi pricing schedules between them have meant at least for Brent, the swing was at one stage over five dollars in less than two working days. Cast your mind back to last Thursday when the Lausanne talks were on the brink of ending without agreement, a final push over the line and agreement from the Supreme Leader (Iranian, not American) meant that a framework deal was possible. Cutting a deal on centrifuges and redesigning the heavy-water reactor, in addition to regular, visible inspections by the IAEA has ensured that the parties have until June 30th to draft a comprehensive nuclear agreement. This is by no means the end of it all although it may be the beginning of the end, amongst those wishing to scupper the agreement include Bibi and of course the newly in majority, Republicans in the US Senate. Having said that the deal stands more than a 50% chance of success which is why the oil price tanked on thursday although Brent did actually bounce around a dollar off the bottom to end up down only $2.15.
There will be much speculation about how much oil and how quickly Iran will get back onto international markets and whilst that shouldn't be under-estimated it will take time. The June 5th Opec meeting probably comes a little too early but expect some fiery discussions about Tehran regaining market share. Realistically, the sanctions will not be lifted in one go thus ensuring that Iran can't just flood the market, although there is the small matter of around 30m barrels of stocks to distribute. Going from the current production of around 2.8m b/d to, say, 4m b/d will take some time but long term with modern kit and backed by majors experienced in-country it should not be dismissed. Having said that I suspect that the Oil Ministry are going to have to make life a bit easier for the companies, maybe giving a bit of equity this time.
With one mighty leap the oil price went from depression to happy days after Saudi Aramco announced that it was increasing its prices to Asian refiners for May liftings thus making people believe that…
