Consequently, the output loss from Kuwait could exceed the global surplus that brought oil prices to a 12-year low in February.
“If the potential loss of Kuwaiti crude supply is sustained long enough, that is roughly equivalent to current estimates for the global stockpile build in the second quarter,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA, told Bloomberg. “Of course, there is a big ‘if’ in terms of how long the strike will last.”
Additionally, looking at the energy sector, U.S. oil producers may be rallying on more optimistic earnings bets. The energy sector has suffered some of the most pessimistic first quarter projections, which leaves the oil producers a lot of room to surprise on the upside.
“Unless there’s a big move in crude people will wait to see what happens and will be watching earnings,” Matt Maley, an equity strategist at Miller Tabak & Co. LLC., told Bloomberg. “Revenues are down at these big banks but they beat expectations, they had already priced in negative earnings, and they were able to bounce. It may be a little tougher to get a beat-expectations rally in other sectors.”
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