Is this a bigger defeat for David Cameron or President Obama? The U.K. parliament voted against military action in Syria leaving the United States out in the cold and seemingly all alone. In what seems to be a major political blunder, the markets are now pushing back the time table of a potential response to the chemical weapons attack in Syria.
The Obama administration, which widely criticized President George W. Bush for going it alone in Iraq dismissing its "Coalition of the willing" as not counting, would gladly settle for anyone willing. After bold statements by administration officials, it seems that if the U.S. fails to follow through with an attack on Syria in the future no one will ever take them seriously. The question is why would they make such definitive statements and back themselves into a corner unless the administration is going to go through with a military response despite what the rest of the world thinks.
Oil prices fell hard late in the day as short sellers and put buyers bet that an immense attack now just could not happen and strong economic data boosted the dollar. Bloomberg News reported, "Crude oil calls declined for the first time in three days as underlying futures retreated from a two-year high on dimming prospects for an imminent strike on Syria by the U.S. and its allies. Implied volatility of calls protecting against a 10% rise in October futures prices on the New York Mercantile Exchange fell to 30.45% at 4 p.m. from 34.2% yesterday. The most active options in electronic trading today were October $100 puts, which rose 13 cents to 33 cents a barrel with 4,094 lots trading as of 4:07 p.m. October $120 calls were the second-most active, falling 37 cents to 24 cents a barrel at on volume of 4,032 contracts.'
Still with a long weekend ahead of us, will the shorts really feel comfortable pushing the short side? More evidence may come out over the weekend and the possibility that the unwilling may become more willing in the future. UN inspectors may have gathered evidence and the world will have to ask the question whether it is worth the risk to send the message that the use of weapons of mass destruction is and always will be unacceptable, or not.
Natural gas sold off after a bearish EIA storage report but snapped right back as the Atlantic looks like it is getting a bit active. The EIA said that natural gas inventories rose by 67 bcf which was more than expected bringing the total to 3.13 trillion cubic feet. But two storms, one just off the coast of Africa, has a 40% chance of becoming a tropical cyclone and seeming would have a lot of time to gain even more strength over the long weekend. For both gas and oil traders going on holiday it may be another reason to avoid the short side.