A lot of the price rise is due to geopolitical concerns fuelling speculative interest. |
A lot of uncertainty remains in how the Iranian situation will work itself out. There is some concern in the Asian market on whether Iran is a reliable supplier. |
Any decisions on sanctions will not be in the near future because two members on the council with veto power, China and Russia, have rather strong economic ties with Iran. |
At the end of the day, physical asset acquisition is going to give banks more leverage over their trading positions. |
Because of this, there is concern of a potential disruption in gasoline supplies due to this switch-over. |
Because the surge in prices last week was so strong, inevitably there is profit-taking. |
Besides the fundamental supply and demand information, prices are driven by the emotional momentum of the Iranian issue. |
Between now and when the U.N. Security Council actually takes up the issue there will be some saber-rattling, but in the near term traders know there won't be any disruption to supply from it. |
But then the storm reloaded over the weekend, gained strength and set on a path toward the oil facilities, ... The people who sold on Friday are probably kicking themselves now. |
Crude inventory went up and the market is concerned about the continuing gasoline stock draw in the US market and the peak summer driving season that starts in late May. |
Cuts in exports of oil will spark off geo-political fears that will make traders think twice about selling. Traders don't want to be caught short. |
Even if there's available crude for release, if there's no refining capacity that they can use, what good is that? |
Expect volatility in the short term and the market will attempt to react to news with an upward bias. |
Gasoline inventories in the U.S. continue to be an issue in the market because last week's inventory report showed a stock decline as we approach the summer driving season. |
Geo-political factors in [Iran and Nigeria] could bring prices back up quickly. Any downside in prices is limited by these geo-political fears. |