Reducing risk in Russia

U.S. air strikes against ISIS and Russia ending war games on the Ukraine border reduced risk across many markets.

Gold and bonds slipped and crude oil (NYMEX:CLU14) hovered as the market adjusted to geopolitical events and how they may play out in the coming days. A cease-fire between Israel and Hamas militants in the Gaza Strip held leading to hopes of a more stability in the region.

Russia and the possibility of a de-escalation of tensions with Ukraine came as welcome news. Russia that last week lashed out with a food import ban now may be pulling back a bit. 

U.S. airstrikes keeping ISIS in check the threat to oil supply is less. If ISIS is dodging U.S. bombs it may be harder for them to advance and threaten Iraq's oil is the Southern part of the county where the majority of the oil productions is. Dow Jones reports "U.S. airstrikes on Islamic State militants in northern Iraq have succeeded at temporarily containing the radical Sunni group's advance through Kurdish territory," U.S. Defense Secretary Chuck Hagel said Monday.

The unfolding crisis has become an urgent global humanitarian disaster, with up to 30,000 civilians in danger of perishing at the hands of Islamic State soldiers or through exposure and starvation, Mr. Hagel said at a news conference ahead of the annual Australia-United States Ministerial Consultations. "They [airstrikes] have been very effective from all reports we received on the ground," Mr. Hagel said. U.S. forces have bombarded heavy artillery,mortar installations and fighters in northern Iraq for three days as they try and contain the Islamic State, also known as ISIS or ISIL.

While OPEC production rises in July it seems that the markets are breathing a bit easier. Dow Jones reports that OPEC's oil production rose to its highest in five months in July, boosted by the reopening of ports and oil fields in Libya, the oil producers' group said Friday.

In its monthly oil market report, the Organization of the Petroleum Exporting Countries said Libya's production rose by 200,000 barrels a day last month, bolstering the group's output by 167,000 barrels a day to total 29.9 million barrels a day. The increase in production came after Libya's government reached an agreement with rebel forces in July to reopen oil ports and fields that had been closed for nearly a year, raising hopes that its exports could begin to rise.

Gas prices (NYMEX:RBU14) at the pump are falling. According to the Lundeberg survey the average price of gasoline has fallen 6 cents a gallon in the past two weeks. The average nationwide for a gallon of regular is now $3.52. The average price for midgrade gasoline is $3.83 and premium is $3.88. Lund berg says the average U.S. price of regular grade gasoline dropped a total of 19 cents over the past seven weeks.

Natural Gas is looking good technically as supply is still well below average.

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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