Energy report: China and geopolitics take center stage

You take the oil in and you send the goods out, you take the oil in and you shake it all about…. That’s what it’s all about.

Last week it was all about the Fed and unemployment. Who is the largest exporter of goods in the world? If you said Germany, you would have been right last week. China lays claim to the title of world’s largest exporter this week. And this comes against a back drop of record crude imports hitting 21.26 tons in December, setting the stage for an early energy rally. Now add to that the fact that the Nigerian rebels are back at it and rising tensions surround Iran and it is a good morning to buy oil. Still, despite the breakout and the buy happy Monday morning attitude and the frosty global temperatures, oil is coming into some major resistance up around the $85 a barrel area.

Buy anything from China lately? China's exports rose 17.7% in December hitting a whopping $130.7 billion during the month, bringing the full-year export figure to $1.20 trillion. Yet at the same time China’s growth is being fed by a steady dose of government spending, which saw its budget surplus get squeezed. Despite these impressive numbers, it may cause some issues down the road. The pressure on China to allow their currency to float as the peg, gives them an unfair trade advantage over its competitors. China’s government may fear a bit of a bubble as the surge in activity could cause some imbalances.

Those Nigerian rebels are back. Over the weekend Chevron Corp was hit by the rebels shutting down some production in Nigeria's Niger Delta. This is the first successful sabotage since a militant ceasefire last summer. There were reports of shots fired as early as this morning.

Will there be sanctions on Iran? There are growing signs that they may be closer to happening. Dow Jones reported that Swill commodities trader Glenore has cut off gas supplies to Iran. That comes after General Petraeus said it would be irresponsible to not consider military action and making plans for a whole variety of different contingencies. He also said that Iran's nuclear facilities are not bomb-proof and would not comment about rumors Israel may launch a strike against them. Iran's President Mahmoud Ahmadinejad said on further U.N. Security Council sanction will not make Iran back off one iota from pursuing its nuclear program.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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