Oil rallies into yearend as geopolitical risks rise

Year End Rally

Oil (NYMEX:CLG14) is getting a yearend squeeze as inventories fall and geopolitical risks seem to be rising. Economic optimism! War in South Sudan, a terror attack in Russia and labor trouble in Libya are giving the bulls a little ride, but when we ring in the New Year, we also will ring in more supply and that could ease the upside momentum. Until that happens, light volume and momentum make that a dangerous proposition at this time. While oil inventories end the year at a record high, signs of strengthening demand are helping the bull cause. The market also expects that the southern leg of the Keystone Pipeline will put U.S. crude more in line with Brent crude and global prices.

The key thing to watch this year is the growing calls to lift the ban on U.S. oil exports. Exxon Mobil is one that says that the reasons for the ban have gone away and it is time to lift the ban. The lifting of the ban would be a net positive for the U.S. economy. Hoarding oil gives us no real economic benefit and the country could start paying off its huge debt with what would turn out to be another huge revenue source. Assuming the government wouldn't find new ways to waste it.

Natural gas is pulling back on the slight warm up, but winter is already making a big comeback. Temperatures are falling and some forecasters say the deep freeze is going to last! A break to buy!

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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