Awesome trade, Kid, congrats. (May look "easy" on hindsight, but with all those crazy moves, one has to take his hat off)
http://www.barchart.com/headlines/story.php?id=984692 As the Libyan government cracked down on protesters, Western oil companies including Eni and Repsol-YPF temporarily suspended oil production in the country. BP has started evacuating workers. "The protests in Libya are the first to meaningfully put oil supplies at risk," Goldman Sachs said in a report. Goldman, which is forecasting benchmark crude to rise to $103 within 12 months, said recent violent protests in Bahrain show that wealthy oil-rich Gulf states are also vulnerable to political upheaval. "These recent developments in Libya and Bahrain increase the risks of major supply disruptions," it said. The crisis in the Middle East and North Africa began in January with the overthrow of Tunisia ruler Ben Ali, spread to Egypt and the resignation of President Hosni Mubarak and has sparked protests in Yemen, Bahrain, Iran, Algeria, Morocco and Jordan. Traders are watching closely protests in Iran, OPEC's second largest producer, and for signs of any unrest in Saudi Arabia, the world's biggest crude exporter. Analysts fear that further oil price spikes could fuel inflation, undermining consumer spending and global economic growth. "Saudi Arabia, itself an authoritarian state, now finds itself surrounded by countries in the throes of revolution," energy analyst Richard Soultanian of NUS Consulting said. "Should the current situation continue to deteriorate, it has the potential to not only roil the energy markets but also upend the nascent and accelerated recoveries in developed and emerging markets." Some observers expect a return to the sharp fluctuations of oil prices seen in the 1970s. "Today's situation is reminiscent of the 1970s," said Anthony Michael Sabino, a professor at St. John's University's college of business. "The price of oil will now jump in direct relation to one of its oldest barometers â political tension in the Middle East." "Expect nothing but a roller coaster ride for a few weeks, if not months." Also looming over markets is the impact of higher oil prices on the still fragile economic recovery in many countries. "While an interruption to Libya crude production would be definitely bullish oil prices ... the economic recovery can be put in question if oil prices were to return to the summer 2008 levels," said Olivier Jakob of Petromatrix in Switzerland. "This remains for now a headline market until we can better assess the amount of crude supply disruption in Libya and the response from the IEA and Saudi Arabia." Saudi Arabia's oil minister Ali Naimi was quoted as saying that his country's production capacity of 12.5 million barrels per day could help "compensate for any shortage in international supplies." Saudi Arabia currently produces around 8 million barrels per day.
I would say this analyst price levels are crazy , I won't agree on price but he has 2 points if Libya, Algeria production halts for months 1) price hike forecast based on reduced OPEC spare capacity 2) 1990-91 gulf war time oil speculative funds are so few compared to today speculative funds (10x ?) ----- http://www.bloomberg.com/news/2011-...if-libya-algeria-halt-output-nomura-says.html âIf Libya and Algeria were to halt oil production together, prices could peak above $220 a barrel and OPEC spare capacity will be reduced to 2.1 million barrels a day, similar to levels seen during the Gulf war and when prices hit $147 in 2008,â the Tokyo-based bank said in a note today. The Organization of Petroleum Exporting Countries has spare production capacity of about 5 million barrels a day, according to the International Energy Agency. Saudi Arabian Oil Minister Ali al-Naimi said yesterday that the organization will boost output if there is a shortage. âThe closest comparison is the 1990-1991 Gulf War,â during which OPECâs spare capacity dropped to 1.8 million barrels a day and prices surged 130 percent in seven months, Nomura analysts led by Michael Lo in Hong Kong wrote. Nomura said the $220 prediction may be an underestimate, as speculative investors trading oil who were not active in the early 1990s may amplify the price gain in the event of an export halt. Algeria produced 1.25 million barrels a day last month, while Libya pumped 1.59 million a day, according to data compiled by Bloomberg.