Oil spikes after reported pipeline attack, report denied

Nightmare scenario

It was like your worst nightmare coming true. Reports of a pipeline attack in Saudi Arabia accompanied with pictures seemed to suggest that the hopes for any chance for low energy prices are increasingly unlikely. The Saudis denied the report yet it once again put risk in focus. Oil prices spiked to above $110 against a backdrop of already increasing risk to supply as reports that the United States may join Israel in an attack on Iran and reports that Israel may test a missile is playing into the simmering tensions in the region.

In Iran a sham election for a sham government may actually tell us a little bit about the popularity of President Mahmoud Ahmadinejad versus the Supreme something or other. The bottom line is that this may give us some insight into the power the president has and if we see a big turnout, it is possible that the madness that threatens to drag to world back into war will go on.

The Houston Shipping channel was closed but is reopened and Gulf coast imports could be down next week. If at first you don't succeed …..Try again! It seems that TransCanada has reapplied for the northern leg of the Keystone Pipeline. TransCanada as reported by Penn Energy, announced it has sent a letter to the U.S. Department of State (DOS) informing the Department that the company plans to file a Presidential Permit application (cross border permit) in the near future for the Keystone XL Project from the U.S./Canada border in Montana to Steele City, Neb. TransCanada would supplement that application with an alternative route in Nebraska as soon as that route is selected.

Penn Energy says that the company also informed the DOS that what had been the Cushing to U.S. Gulf Coast portion of the Keystone XL Project has its own independent value to the marketplace and will be constructed as a stand-alone Gulf Coast Project, not part of the Presidential Permit process. The approximate cost is US$2.3 billion and subject to regulatory approvals, we anticipate the Gulf Coast Project to be in service in mid- to late-2013.

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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