Kilduff Report

WTI prices are, once again, up against tough price resistance. Prices surged toward $99, early yesterday, but the gains did not hold. Prices seemed to fall on news that Libyan oil production has rebounded back above the 1 million bpd level, after recently falling below that mark. In our view, the lost Libyan output has been as essential to the rally as anything else. A lot of the recent rally has been ascribed to the recent pronouncement by President Obama

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WTI prices are building on last week’s gains, and they appear headed above $100. The renewed surge comes on the back of extensive oil output issues in several OPEC countries. Specifically, Libya’s output fell below 1 million bpd, Nigeria has had sporadic issues, and several other African producers have experienced difficulties. All of this has added up to about 2 million bpd off of the market, especially when one figures in the embargoed Iranian barrels.

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For all the tumult in the global equity markets, oil prices are down modestly. In fact, with WTI just above 95.50, everything would seem alright, in terms of the functioning of the global economy and energy demand outlook. The three major oil market monitoring agencies did reduce their demand outlook, but not by very much. Beyond the demand cut and the rise in Saudi output, the IEA’s outlook also noted a surprising rebound in Iranian oil being sold to China.

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