---

Trends

Rotterdam: $ 4 lower
Singapore: $ 2 lower
US Gulf: $ 2 higher

Crude taxes caused huge draws on U.S. crude inventories (Brent: $111.2)

While the unemployment situation in the U.S was more or less in line with market expectations (155,000 jobs added in December), the Department of Energy (DoE) reported a huge draw on crude stocks.

Release: EIA oil data (Consensus)
Crude: -11,120,000 barrels (-920,000)
Distillates: 4,570,000 barrels (1,390,000)
Gasoline: 2,570,000 barrels (1,000,000)
Refinery utilization: +0.1%

Refineries had a very high crude run (+90% utilization) to minimize their crude stocks before the year end. As there is a tax on crude stocks based on year end holdings refineries had a tax incentive in addition to the normal demand for products.

Once again, Sudan and South Sudan agree to talk, in order to avoid the recent rhetorical discrepancies leading to physical aggressions. The pre-war 350,000 bpd production is still halted, but 50% was scheduled to come back online within a few weeks. On a global perspective, the impact of the Sudan-S.Sudan production halt on oil prices has dropped as Saudi Arabia currently has more than sufficient spare capacity to make up for lost production from the African producer.

Recommendation

With the potential FED policy change on one side and cutback in OPEC supply on the other, oil prices could be in for a bumpy road in the months ahead. Clients are advised to take advantage of any outliers in prices, before the pendulum swings back in the other direction.