A few weeks ago it was a report, vehemently denied since, by Iran’s PressTV that an important oil pipline in Saudi Arabia had been bombed and was on fire. That sent crude futures spiking only to come back down into what has been since a tight (but day-to-day volatile) consolidation range for both Brent and West Texas Intermediate crude prices.
Today we had a similar event which seemed designed to break that consolidation range down and send oil prices down for purely political benefit of two embattled leaders of the not-so-much-free-as-allowed-to-think-they’re-free world, as the rumor floated that the U.S. and the U.K. would tap their Strategic Oil Reserves to alleviate high oil prices. Who does Obama think he is? Bill Clinton?
WTI crude prices spiked down to near $104 per barrel only to recover the $105 level and be held there for most of the rest of the day. By the time the Globex shut down Thursday evening WTI crude had closed at $105.40 per barrel and Brent crude had settled at $122.62. $121.60 is the area of major support for Brent crude.
Both markets are going to need to move away from these levels and back near the top of their ranges to avoid long liquidation. With the Dow closing over 13,250 and the Obama administration getting their much needed headline of the S&P closing over 1400 for the first time since the Bush Presidency (don’t discount the cache that gives Obama with what’s left of the middle class left in America) I sincerely doubt this range will be much longer lived unless the U.S. and Europe back down over Syria and Iran.
Also, do not discount the effect of China’s massive importation of oil which is putting a strain on the market all over the world. Watch the next U.S. T.I.C. report with interest to see if China is turning their import U.S. Dollars directly over into Oil (and Gold).
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