Record U.S. refining run is driving down gas (NYMEX:RBQ14) prices even as oil prices rise due to geopolitical risk. The Lundberg survey shows that gas prices have fallen 9 cents a gallon in the last 2 weeks. Lundberg says that the average price for regular gasoline at U.S. pumps dropped 9.04 cents in the two weeks to $3.5795 a gallon the lowest level since March 21.
What we are seeing is the benefit of U.S. shale oil starting to take hold. Abundant supply of cheap high yielding oil is allowing producers to produce gas at a record pace. This has provided a buffer to a price shock that might have occurred with all of the geopolitical issues the world has had to deal with.
Libya is just one hotspot that heated up over the weekend. Crude oil (NYMEX:CLQ14) prices were moderating on hopes that Libyan oil production and exports would come back but that now seems iffy. The United States along with many other countries are evacuating their people from their Libyan embassy and warning citizens to leave. Libya's national oil company has warned of a possible environmental disaster after a fire broke out at a fuel storage oil depot in southern Tripoli.
In the Ukraine the violence continues. Today the U.S. released satellite images that show that rockets were fired from Russia into the eastern Ukraine raising the stakes in this conflict. While many in Europe have been reluctant to put tough sanctions on Russia this evidence along with the recent downing of a civilian aircraft will make it tougher to ignore Russian involvement in the Ukraine led by Russian President Vladimir Putin.
Of course Vlad started to go bad many years ago when he went after he jailed Mikhail Khodorkovsky, once Russia's richest man and the mastermind behind YUKO's who dared to believe that Russia was a democracy. Putin threw him in jail on trumped up charges of tax evasion ending Russia's demorcratic reforms. Today the Permanent Court of Arbitration in The Hague has ruled that Russia owes former shareholders of the Yukos more than $50 billion in compensation for the Putin's seizure of the company. Russia will appeal.
Fox News reports that Israeli Prime Minister Benjamin Netanyahu on Sunday vowed to do "whatever is necessary" in the country's latest weeks-long battle with Islamic militant group Hamas. "Hamas has broken five cease-fires," Netanyahu told "Fox NewsSunday." "They've violated their own cease-fires. They are firing on us now. We'll do whatever is necessary to achieve our goal of a sustained quiet."
Fox News reports that Hamas announced earlier Sunday that it has agreed to a 24-hour holiday truce in Gaza, hours after Israel resumed its ground offensive and airstrikes against the militant group for firing a salvo of rockets at the southern part of the country. After Israel announced a 24-hour truce late Saturday, Palestinian militants fired rockets deep into Israel, prompting it to resume an offensive aimed at destroying rocket launchers and cross-border attack tunnels used by Hamas, the Islamic militant group ruling the coastal strip.
But hours after the renewal of hostilities, Hamas said it would be willing to abide by a new 24-hour humanitarian truce ahead of the Eid al-Fitr holiday marking the end of the muslim fasting month of Ramadan. The three-day Eid al-Fitr holiday is expected to begin Monday or Tuesday, depending on the sighting of the new moon. Hamas spokesman Sami Abu Zuhri said the truce would go into effect at 2 p.m. local time Sunday (7 a.m. ET). However, shortly after the truce was to have started, warning sirens wailed in southern Israel and the military said three rockets landed in the area, without causing casualties or damage.