Commodity Daily News

Middle East Turmoil Continues to Add Risk Premium

Crude oil prices yesterday rebounded to around $105.50 a barrel on continuing uncertainty in the North Africa and Middle East.

Unrest in Bahrain, Yemen, and Syria has raised further worries about world oil supplies. Those countries don't produce much oil, but they are important transport links. Yemen sits on a strategic shipping lane that handles about 4 million barrels of oil a day.

Supply threats lifted markets, while demand uncertainty helped trim the high prices. The nuclear crisis in the quake-hit Japan, debt crisis in Europe and declining consumer confidence in US made investors not optimistic about the oil demand outlook.

Today, in addition to any developing news out of the Middle East, traders should also pay attention to the US Crude Oil Inventories report as it tends to have a large impact on crude oil's prices recently, especially for the short-term.