Technical & Fundamental Oil Reports Specialists

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It’s the geopolitics stupid.

Published Friday, May 22nd, 2015

The oil equivalent of ‘it’s the economics stupid’ is in the title of this report. Geopolitics can spoil the best laid plans and forecasts of fundamentalists. If tensions are high fundamentals take a back seat. Oil bears face two threats, an unlikely reversal in OPEC production strategy on June 5 and a speculative buying spree driven by geopolitical concerns, which poses the bigger of the two risks.

Some of the speculative length already in place is no doubt already a “hedge” against an oil disruptive geopolitical event. We don’t need to remind readers that a disruption does not have to occur, the fear that it might occur is good enough to attract buyers and chase away sellers. The events this week in Syria and Iraq will surely give any bear cause for concern. It took only 200 IS fighters to frighten off 2500 Iraqi soldiers and take Ramadi only 80 miles from Baghdad. Yesterday Palmyra fell to ISIS in Syria and the group now has complete control of the Iraqi/Syrian border.

“I do not think we are losing” says President Obama; it is merely a “tactical setback”. Tell that to the people on the ground. It all looks very serious and when you add into the mix Iranian/Saudi hatreds, a right wing government in Israel, a more aggressive regime in Riyadh and the conflict in Yemen it is not difficult imagining uncommitted oil bears turning tail and even the committed having doubts.

to read the rest of the report, please click here

Posted by David Hufton