French strikes could push crude spot down but products up

15 October 2010 12:53  [Source: ICIS news]

LONDON (ICIS)--The ongoing French strikes could lead to an oversupply of crude oil and a shortage of product, a banking analyst said on Friday.

If the strikes continue “we could see some tightening of product supplies” which would lead to an increase in prices, the source said.

“But with less crude being processed, this could depress prices, a similar situation seen in the US during the hurricane disruptions,” the source added.

A physical oil trader said there were more than 50 ships anchored off Fos-Lavera waiting and about 30 of those were crude cargoes.

During the past week, crude oil market participants were expecting traders to start offering these cargoes in the market at lower prices.

However, while some cargoes were understood to have been re-directed to other refineries, others were waiting there for the situation to improve, the trader said.

"If the situation were to continue then we could start seeing a negative impact on crude oil spot prices," the trader added.

On crude oil futures, prices were range bound for most of the morning session as the market was waiting for the US to release key economic data later in the day and for the Chairman of the Federal Reserve, Ben Bernanke, to deliver a speech on monetary policy.

December Brent was trading at $85.95/bbl, down $0.25/bbl from the previous close, and November WTI was at $82.60/bbl, down $0.09/bbl.

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Author: Giovanni Corio

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