Angie, Angie, when will all those clouds disappear? Angie, Angie, where will it lead us from here? We can’t hit austerity goals with no money in our coats; you can't say were satisfied. But Angie, Angie, you can't say we never tried! Angie, you're dutiful, but ain't it time we were allied? Angie, we still need you, forget all those times we lied! All the dreams we held so close seemed to all go up in smoke. Let me whisper in your ear: Angie, Angie, where will the euro go from here?
It seems like the song that European Central Bank President Mario Draghi was singing about saving the euro has touched Angela Merkel somewhere deep down in her heart. Chancellor Angela Merkel said that her country was committed to doing what it could to maintain the euro and that Draghi's recent comments on saving the euro currency were completely in line with Germany's thinking. This as well as other issues helped send oil to a three month high.
Oh sure, we had our geopolitical issues. Reports of a computer virus at Saudi Aramco could be an ominous sign of a cyber-war to come or it could mean one of their employees was playing games online. Of course for Iran, using a cyber-attack to shut down Saudi oil production with a cyber-attack would be a lot easier than trying to shut the Strait of Hormuz and it would be a lot safer. Well at least from an Iranian point of view.
Higher gasoline prices are starting to worry the Obama administration as talk of a release of oil from the Strategic Petroleum Reserve. I guess poll numbers are more important than national security as Reuters News reports that, “The White House is "dusting off old plans" for a potential release of oil reserves to dampen prices and prevent high energy costs from undermining sanctions against Iran, a source with knowledge of the situation said on Thursday. U.S. officials will monitor market conditions over the next few weeks, watching whether gasoline prices (and poll numbers) fall after the September 3 Labor Day holiday, as they historically do, the source said. It was too early to detail the size of any release from the U.S. Strategic Petroleum Reserve and other international stockpiles if a decision to proceed was taken, the source said.”
”As prices rise again, U.S. officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports. "The driving force in this is both impact on the economy and impact on the Iran sanctions policy," the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while international sanctions were having an effective impact on its crude exports and revenues.”
The United States has not yet held talks with international partners about a coordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency (IEA) were receptive to a potential release a few months ago when conditions were similar. Those countries were concerned about the impact of high oil prices on the global economy and Iran then, and those concerns remain equally relevant now.
Oil and products are hopping but pulling back on the news. While we may see some Friday profit taking, the risk is still to the upside. Brent crude is still sizzling with North Sea production and increasing Middle East tensions!