Rising geo-political tensions and a tightening global supply outlook is supporting crude oil. The strength comes even as the dollar is higher, being supported by risk aversion. Syria and North Korea concerns and terror attacks on innocent Coptic Christians in Egypt is raising concerns of conflict that could impact oil supply.
Yet, while many continue to focus on the so-called U.S. oil glut, the impact from falling gasoline supply has gone unnoticed, unless you of course filled up your gas tank this weekend. Gasoline supplies have fallen eight weeks in a row driving U.S. gasoline prices to sit at their highest level in eight months. That is according to the Lundberg Survey that showed an average of $2.4327 per gallon in the United States. The dynamics of this market are changing if you take the time to look beyond the headlines.
And beyond the headlines are Iran and Russia. They seem to apparently approve of using chemical weapons on your own people and view it as a domestic decision. The U.S. wants to show a united front against Russia and Iran as they try to send a message that the use of banned chemical weapons is not to be tolerated. The Trump administration is warning Russia to drop its support for Assad or it will further strain relations with the United States and the rest of the G-7 nations. A statement released by "the joint command operation center of Syrian allies," a group that includes Russia and Iran, warned the United States against further military actions in Syria saying they crossed a “red-line.” Is that the same red line drawn by President Barack Obama regarding chemical weapons? They say they will respond with force.
A state of emergency has been declared in Egypt as 44 people were killed while attending Palm Sunday Mass. The massacre of innocent Christians is indicative of the evil purported by Muslims extremist that are determined to bring hell on earth. The ramifications of this event will not go without a strong response from the Trump administration that will not sit idly by while the scourge of terror continues.
In the meantime U.S. inventories should fall this week as refiners ramp up production. Buy breaks for what could be the beginning of a major rally.