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Oil prices have been in positive territory since the beginning of the Asian trading session and for the first time since peaking (WTI) during the March 7 session. In fact most traditional commodity markets have rebounded a bit on overnight trading on the back of a positive day in the Japanese equity markets as participants continued to sort out what Japan's requirements will be for a whole basket of commodities in the short- and medium-term. The main difference so far this morning from the last few days is the massive selling of any and all risk asset classes has subsided and started to slow since yesterday afternoon's trading session in the US. Although the market sentiment is still decidedly bearish the amount of bad news emanating from the Fukushima nuclear facility has also started to subside indicating that the possibly that the worst may be over and the risk of a massive release of nuclear fallout could be also be starting to decline. However, the nuclear issue is still a big issue and one that will be impacting the direction of markets around the world for the foreseeable future That said the market is now placing more focus on the massive damage from the earthquake and the tsunami and what it will take to move Japan into a rebuilding and reconstruction mode. As the nuclear situation moves out of the headlines financial and commodity markets will likely being to stabilize.
With the ramifications of the Japanese disaster worked into the price of most risk assets oil investor/traders are starting to re-focus on the evolving situation in Libya and the greater Middle East. Since the Japanese disaster hit on Friday Gaddafi has retaken a major portion of the area that was under control of the opposition group while the US and the rest of the western nations continue to discuss the merits of establishing a no fly zone in Libya. However, irrespective as to whether the west gets involved and/or Gaddafi continues to remain in control, oil exports from Libya are going to be at a reduced level for months to come simply due to the damage at several of the oil ports from bombings related to Gaddafi retaking those cities as well as sanctions on Libya.