The market has three drivers right now: distillate stocks (including heating oil), demand growth and the weather, ... Stocks are moderately bearish, demand is neutral and the calendar itself is moderately bullish, assuming a normal winter. |
The market has three drivers right now: distillate stocks (including heating oil), demand growth and the weather. Stocks are moderately bearish, demand is neutral and the calendar itself is moderately bullish, assuming a normal winter. |
The markets have been reacting to news on Iran, but the physical oil markets have been fairly relaxed so I'm not surprised to have seen them fall. |
The reason we worry about political risk is that it has a chance to become a real fundamental factor, like it happened in Nigeria, where you lost some real supply. The spare capacity issue for refining and crude production still underlies everything because demand is still healthy. |
The speculative money is as much of a key driver for oil prices as Iran and Nigeria. There has been a massive influx of new money into commodities in general since the start of the year. |
The UK will eventually have to import, |
There is a lot of refinery capacity around Houston. If (Hurricane Rita) goes further south then it could hit refineries around Corpus Christi. |
There's a lot of investment money searching for a home. Investors are buying the argument that it's an emerging asset class and we've been seeing that with a vengeance in January. |
This is just drifting around. But the Nigeria situation, as the weeks wear on, is providing a firmer floor for the market. |
We had such a big run-up in the last couple of weeks that the market is going to want to consolidate and pause to figure out what happens next. |
We're trading on the weather. It's cold in New York, so the price is going up. |
When you step back and put it all together, it's nice timing. It's a New Year's reminder of the geo-political factors that are driving the market higher. |
With each passing week of warm weather, the upside diminishes, the downside increases, and the chances of an oil market correction before the springtime also increase. |