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The beginning of a 3 year war

Published Friday, September 26th, 2014

President Obama warns that the elimination of IS will be a long haul. The UK Defence Secretary forecasts that it will be at least a three year project. Can we assume that oil supplies other than those in Northern Iraq and Syria will not be seriously affected at some point from terrorist retaliation either in the Middle East itself or elsewhere? Of course not, but bulls cannot spend their lives pricing such an eventuality in when the time frame is so long.

Out of the money call options has to be their investment of choice leaving daily flat price to the whims of the day trade speculators who deal in the here and now and not in what might happen even a week ahead, never mind a month or year ahead. US airstrikes are reported to have targeted 12 small oil refineries and 3 oil fields under IS control in Syria. Brent responded with a high/low range of only $1.34 bbl and closed marginally up at $97 bbl.

WTI closed down 27 cts/bbl at $92.53 bbl putting the closing arb at -$4.47 bbl. At one point yesterday it slipped just below -$3.80 prompting talk of the arb being open to move West African and North Sea barrels to the US East Coast, displacing Bakken oil moved across the continent by rail.

to read the rest of the report, please click here 

Posted by David Hufton