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Friday, March 23, 2012

Oil Spikes -- Talking Head: Due to Decreased Iranian Exports

Updates

Moments later: CNBC talking head says that traders are starting to question more openly whether Saudi can meet their pledge to cover any Iranian shortfall; Brent continues to outpace WTI; the gap continues to increase.

Original Post

Moments ago on CNBC: oil up about $1.35. CNBC crawler says due to decreased Iranian exports.

Let's look at the recent chronology:

First, we all knew that Iranian oil exports would decrease under sanctions --> price up.

Second, Saudi said they could cover any Iranian shortfall --> price down.

Third, today, -- prices up. The "first" above was a given, almost a "fact."  The "second" point -- well, there it is, we have differing opinions on the veracity of the Saudi reassurance.

Oil is now up about $1.50.

2 comments:

  1. Goodness, are the "traders" speculating on the future price or are they "investing"? Figuring out whether a Saudi prince is leading you on about future plans/capabilities doesn't seem to me to be an easy thing to pin down with any sort of accuracy (or as you like to say repeatability) Kinda like speculation? Or a fools errand?

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  2. I've blogged many times on "speculators," a term I don't find useful. A better model for me is investors vs traders.

    I would assume that both traders and investors are pushing the price of oil up a bit today. But investors had a great opportunity yesterday to accumulate more shares in oil companies at a discounted price.

    It is interesting to see a bit of discussion on whether the Saudis can match the Iranian shortfall in the near term.

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