In July front month crude oil passed $76 per barrel for the first time ever. And with multiple conflicts brewing in the Middle East, $76 may soon look cheap.
Peter A. Thomas, a senior broker at RJO Futures, says with the Middle East moving from a cold war situation to a hot one, “all bets are off.”
He also cites escalating violence in Nigeria, where militants have taken out two oil pipelines, Iran’s refusal to curtail its nuclear ambitions and terrorist bombings in India as primary factors pushing prices higher. With bombs falling, Thomas sees no point in setting levels. “Israel is invading Lebanon and Syria is backing Hezbollah. There are no such things as highs when there are global confrontations going on.”
Ian Sweet, an account executive at Rosenthal Collins Group LLC, says in addition to the violence in the Middle East, lack of refining capacity is driving oil higher. Sweet says the high set on the July 13 rally will become support. “A lot of people are talking about the $80 to $90 area.” He expects to see a top between $85 to $90, and a low of $76.50.