There is certainly the possibility (of prices hitting USD70). The recent events have attracted speculators and oil has become a lot like an investment.
There is certainly the possibility (of prices hitting 70 dollars). The recent events have attracted speculators and oil has become a lot like an investment.
Because the surge in prices last week was so strong, inevitably there is profit-taking.
The potential supply disruption risk premium has already been built into the price and because there really is no immediate threat to supply ... prices are correcting downwards.
It looks like the perfect storm to drive prices up.
Short term events like this which are unpredictable can drive a high price floor for crude prices. That is why we are seeing pricing in the high 50s even though the market is well supplied.
The geo-political risk premium and how it fluctuates is a key driver in the price of oil. Since the time Saudi Arabia objected to Iran's call to cut output and promised to provide more oil, the risk premium has declined.
The geopolitical drama over Iran and Nigeria is sending oil prices upwards. But Nigeria is more problematic in the short term, because it has actually disrupted supply.
The geopolitical drama over Iran and Nigeria is sending oil prices upwards.
A lot of the price rise is due to geopolitical concerns fuelling speculative interest.
There is no fundamental reason driving prices back up. Market participants felt that the 60 dollar level is an important mark and dropping below 60 is too much of a fall.
Besides the fundamental supply and demand information, prices are driven by the emotional momentum of the Iranian issue.
With all these events in the Middle East, prices hit the psychological level of 70 (dollars) and settled above it.
This morning the price crept upwards so the market continues to be driven by the short-term geopolitical (pressures) primarily in Nigeria.
We can expect an overall high floor in prices this week.
Iran individually can't raise prices ... whether Iran will respond to sanctions with an oil embargo may lead to a spike in prices. But I don't think it will occur because it will affect oil revenue to Iran.
The pullback appears to be due to profit-taking, which is not surprising considering prices have really surged in the past few days. The decline will not be large because the Iranian issue is keeping a high floor under prices.