Oil is rising as geopolitical risk came back in the most horrendous way. The shooting down of an unarmed passenger plane with a surface to air missile could raise the tensions in Ukraine to a whole new level. All 298 souls aboard Malaysia Airlines Flight 17 were killed. Oil had the biggest increase in a month and gold, wheat, bonds, rice spiked only to pull back. The market already elevated on new U.S. and EU sanctions on Russia tried to level off but comments by the Fed’s James Bullard about a “bond bubble” and later news out of Israel is putting risk premium that was taken out back in.
Oil popped as Israel moved ground troops in to stop Hamas rocket attacks after it seemed that the terror group violated an UN ceasefire. Overnight Fox News reported that Israeli Prime Minister Benjamin Netanyahu ordered the military to prepare for a "significant expansion" of its ground operation against Gaza militants. Netanyahu said the military's primary goal would be to destroy underground tunnels used by Hamas to attack the Jewish State. The announcement came hours after Israeli ground troops and tanks struck more than 100 terror targets in the Gaza Strip. Oil traders view this as bullish as it raises the odds of terrorist backlash to those that are terrorists that back the Hamas cause.
U.S. refining runs continue to be off the map. In the Midwest refiners are producing more product than there stated capacity!
Natural gas saw another bearish injection of supply, coming in at 107. Cool temperatures are helping this historic rebound in supply but we are still 25% below the five-year average.