The petroleum market will be obsessed with thawing relations and thawing turkeys. The ultra-low sulfur diesel led a comeback in energy in the aftermath of skepticism surrounding the surprise deal with Iran. Perhaps it is because we are expecting the coldest Thanksgiving since the 1950s or it could be because some members of Congress are giving the Iran deal the cold shoulder. The deal with Iran will be behavior dependent. If Iran stays on its good behavior it could open the door for more lightening of sanctions. Despite strong opposition from some members in Congress it seems that they may wait before removing more sanctions to see how this so called first step plays out.
Libya saw violence as clashes between militants and the army left at least nine people dead. The violence in Libya and the partial lessening of the sanctions noose around Iran’s neck is why the Brent crude oil bounced back.
Of course the impact from the Iran deal may not just be about oil (NYMEX:CLF14). Reports that the United States released $8 billion in frozen assets to Iran could send Iran on a commodity buying spree in an attempt to bring goods to Iran’s unhappy consumers. The purchases may range from grains to gasoline and other things that Iranians have been lacking. The United States also agreed to suspend “certain sanctions on gold and precious metals, Iran’s auto sector, and Iran’s petrochemical exports, potentially providing Iran approximately $1.5 billion in revenue,” according to a fact sheet provided by the White House. Iran could earn an additional $4.2 billion in oil revenue under the deal.
In the meantime oil traders and natural gas traders have weather to contend with. Snow and below normal forecasts should give those fuels some underlying support. The AP reports that the winter storm is being blamed for at least 11 fatal accidents in the West.
Ninety percent of travelers this week will drive, according to AAA, and an estimated 38.9 million people — 1.6% fewer than last year — are expected to drive 50 miles or more from their home. Gas is about 15 cents cheaper than last year, AAA said Monday, with a gallon of regular selling for $3.28.
The car-lobbying group and travel agency says Wednesday will be the busiest travel day, a forecast based on a formula that factors in consumer confidence, stock market performance, unemployment and a survey of 418 people that has a 6% margin of error. Air travel will be busier and more expensive than usual this Thanksgiving. This holiday will likely see the most air travelers since 2007, according to Airlines for America, the industry's trade and lobbying group, with the busiest day being Sunday, an estimated 2.56 million passengers. Wednesday is expected to be the second-busiest with 2.42 million passengers.
Beware of big swings as traders leaving early to get a head start on thawing turkeys could lighten up volume and open interest leading to some large swings. Still with the cold it might be harder to defrost those turkeys as the cold will add to the defrost time and the time on the grill. Assuming they are not going to take the risk of deep frying the turkey and burning down their garages.