Oil suppliers' problems support the bulls
Crude oil prices Brent stuck in the 111.50 - 116.50 range as supply-side concerns and geopolitical factors support the bulls despite the clearly bearish nature of fundamentals such as sluggish demand and related inventories. Activity in China's manufacturing sector is contracting faster than anticipated and Hurricane Isaac has not significantly damaged the supply chain, discounting WTI to oil Brent recovered to the current values of 18 dollars after a short period during which the oil WTI cost more Brent.
The nuclear standoff between Iran and the West continues, and with the International Atomic Energy Agency's (IAEA) announcement that Iran has doubled production capacity at its main nuclear facility, the situation will only escalate. Iran continues to deny using the atom for military purposes, and Israeli politicians meanwhile are losing patience because the possibility of an attack is quickly fading. Whether or not an armed attack triggers a sharp rise in oil prices depends on Iran's reaction, but in any case, current prices already include a risk premium.
The American government is also on alert - ready to press the red button called "Strategic Gasoline Reserve". The relentless rise in gasoline prices, which are already three times more expensive than a year ago, is approaching the psychological mark $4 a gallon.The International Energy Agency (IEA) and its representatives are not in a hurry to sound the alarm, as the move could be seen as politically motivated. The International Energy Agency (IEA) and its representatives are not in a hurry to sound the alarm, as such a move could be politically motivated. The last time the "reserve" was used was during the 2012 Libyan war, which, however, did not have the impact on prices that was hoped for, and the IEA does not want to be seen as failing to successfully manage the process of using the reserves. The states are responsible for almost half of the Strategic Reserve.
This week, the markets' attention will shift to the ECB meetingWith the U.S. labor market report scheduled for Thursday and the Friday report on the U.S. labor market, investors will be interested in whether to expect additional monetary stimulus from the FED. The weakening dollar in recent weeks has also supported the energy sector's positive momentum, but now that the latest speculative positioning data suggests a net short dollar position is building for the first time in almost a year, any deterioration could lead to a a new wave of flight from the commodities market and buying dollars. As of August 28, the speculative position was almost unchanged, remaining at 108 million barrels for Brent crude, with money fund managers increasing their net long position in WTI crude by 8% to 190 million barrels, the highest in 4 months.
