The global oil markets are still focused on whether or not the Iranian regime intends to continue on the path to oblivion as they continue to provoke the globe with their irrational behavior. Add to that the threats they are making to Saudi Arabia and we're seeing the oil market heat up just as China's perfect GDP number heats up.
China's GDP hit its slowest pace in two years but it was not as bad as feared, giving oil bulls the best of both worlds. Not only will demand be better than expected in the short-term but in the long run, it is even more bullish because the weakness in the number should inspire more stimulus from the Chinese government. Forget the fact that China's stash of newly printed dollars has fallen recently, the odds are they will do more very soon giving the complex a boost.
At the same time one may also wonder whether or not Saudi Arabia is trying to commit suicide by proclaiming that they would like to see a triple digit oil price. I guess that is the price of trying to keep peace and stability in a country where the discontent that we have seen in other Arab countries bubbles below the surface. They may have even more problems as the Iranian's are targeting them specifically, warning them not to make up for any loss of Iranian oil production. The Iranian's are also trying to inflame the anger in Saudi Arabia's unhappy Shiite population as well as the Shiite majority in Neighboring Bahrain. Of course it will be easier for the Saudis to placate them because they will be able to sell oil and the Iranian's cannot.
Now if that is not enough to worry about there are reports that Al-Qaeda has taken over a town in Yemen. So explain to me, in this dangerous world why we are gutting our military and spending more for health care?
There is news out of Nigeria. A major oil and gas discovery was made in the country. The AP reports from Lagos, Nigeria that Afren PLC says it has discovered a new oil find just off Nigeria's southern coast. In a statement dated Tuesday, the London-based firm says they discovered oil deposits "equivalent to those that have been developed and are in production at the Okoro main field." The Okoro field now produces roughly 14,600 barrels of crude oil a day, according to company statistics.
Afren says it will carry out further testing at the site and plans to continue exploration around the area.
Afren is a partner in the find with Nigerian oil firm Amni International Petroleum Development Company Ltd. The find is the latest as oil companies continue to look at offshore fields in Nigeria, an OPEC member nation that produces about 2.4 million barrels of crude a day.
Also Bloomberg News reports, "Nigerian President Goodluck Jonathan will meet labor leaders in a bid to end a four-day-old nationwide strike against the lifting of fuel subsidies and avert a shutdown of the oil industry, a union leader said." Of course it is unclear as to whether thing will get back to normal soon. There is still some bitterness in the streets but the union is declaring victory.
It looks like the China GDP number is offsetting all of the downgrade worries coming out of Europe at the moment!
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 firstname.lastname@example.org.