Back To the Well
Can you go to the well once too often? While oil prices are getting hit hard on more Greek fears and concerns about growth after new Basil banking rules, perhaps the threat from the International Energy Agency could keep oil prices on their downward trajectory. The IEA says it is thinking about releasing even more oil from their strategic reserves to offset the loss of that high quality Libyan oil. I guess if at first you do succeed, you do it all over again.
The last release had the desired impact, bringing down Brent crude and bringing in the spread over the WTI. RBOB futures fell hard as it is clear more high quality oil should offset the tightness of gas not only in Europe but on the East Coast of the United States. In fact it worked too well as the CFTC is now looking into suspicious selling activity as oil prices fell hard before the announcement.
Iran is outraged of course that the IEA would consider another source of supply and realizes that it is not needed. They say the IEA is breeching its principles and, as you know by the way they handle street demonstrators, you know that the Iranian’s care about principle. Hey, I thought they got offended when someone told them what to do with their oil. So shut up.
Of course Greece is once again an issue as the market is starting to doubt the Greek parliament has what it takes to cut spending without a restructuring. The ECB’s Stark is also principled and says a Greece restructuring is not an option. You know how they followed the Maastricht Treaty to the letter of the agreement. Oh never mind. And now, of sure, everyone is bearish.
Predictions of lower prices for oil are coming from everywhere! Of course we predicted the $85.00 a barrel area way back and I told you to remember you heard it here first. Did you get positioned? Forget the Johnny come lately who I also predicted would jump on the bandwagon.