Iraq oil exports grow to highest in 20 years

The commodities markets are off to a firm start, in part because the Euro is showing some surprising strength. The reason for this sudden rally on light volume may be because in part to a must read Wall Street Journal article originally titled "As Ireland Flails, Europe lurches across the Rubicon." It is a story about how Angela Merkel and Nicolas Sarkozy were meeting five months after the Greece bailout and discussing the "Deauville Pact." The Wall Street Journal says that, "’The Deauville pact sealed that evening, called for investors holding bonds in insolvent euro-zone nations to shoulder losses on them, starting in 2013. That would instill discipline in profligate countries, but also implied that a Western European nation might default on its debts. That hadn't happened in half a century, and the mere suggestion would shake markets,’ Mr. Sarkozy's own advisers had warned."

The Journal went on to say that, "It also risked enraging the European Central Bank. For months, ECB President Jean-Claude Trichet, 68, had tried to rebuild investors' shattered confidence in the euro zone he had spent his career shaping. The central bank was almost single-handedly keeping Ireland and its tattered banks afloat. That task would be made more onerous by Ms. Merkel and Mr. Sarkozy's pact, which risked undermining the currency union itself."

The story is a fascinating account about the Ireland bailout and how the exercise made the EU grow a little closer. For commodities, the sense that Europe will feel obligated to bail out their members is a reason to get long the euro and get back into the carry trade, especially when volume is light.

Heating oil sank yesterday as the storms across the northeast just destroyed demand. Trucks were not moving, jets were grounded and heating oil, used as a proxy for jet fuel and diesel, could not rally.

We continue to see progress in Iraq. Not only does Prime Minister Nouri al-Maliki want US troops out of Iraq, he's telling the Wall Street Journal that his country's security forces were capable of confronting any remaining threats. But as reported by Bloomberg Iraq's oil production exceeded 2.6 million barrels a day for the first time in 20 years quoting newly appointed Oil Minister Abdul Kareem al-Luaibi at a press conference in Baghdad. The rising output will boost Iraq's oil exports by 5 percent to 2 million barrels a day next month, Falah al-Amri, head of the country's State Oil Marketing Organization, said. The nation sells about 60 percent of supplies to India, China and other Asian countries where demand is increasing.

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.

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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