by Matt Piotrowski, Washington, EI
Oil markets took a breather [sic] Wednesday [Mar 23], with little movement on either of the major benchmarks. It appears that Brent has settled down around the $115 per barrel level, while WTI looks comfortable in the $100-$105 range. The markets have already priced in an extended outage in Libya, but traders are having difficulty factoring in other pockets of instability in the Arab world. Unrest in Yemen, Syria and Bahrain this week is underpinning prices, and will likely do so for some time. There are some dangers on the downside, such as a fragile global economic recovery and a possible short-term decline in Japanese demand, but the risk to the upside appears greater. Societe Generale said this week that if another medium-sized oil producer similar to Libya were to lose output, Brent would rise to $125-$150. And if the turmoil spreads to Saudi Arabia, the world could be looking at $200 oil, the SocGen analysts said.
(U.S. crude ended at a 2-1/2 year high on Wednesday as Palestinian rocket strikes on Israel escalated Middle East geopolitical risks and U.S. gasoline inventories posted the biggest seasonal decline on record, amid ongoing unrest in MENA countries---Reuters. Light, sweet crude---benchmark WTI---for May delivery settled 78 cents higher at $105.75 a barrel on the New York Mercantile Exchange, the highest settlement since September 2008. In London, Brent May crude futures settled down 15 cents at $115.55 a barrel. -- D.R.)