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After last week's gains in oil, we had another strong day today to get the week started right where we left off on Friday. Oil traded up $1.04 today to close the session at $69.04 after setting a high earlier in the session at $69.15. As I wrote on Friday, oil has been bullish lately due to a couple key factors; mainly low refinery production and international violence. Well, just when you thought that things couldn't get worse, they do. Today we get news of additional violence in Nigeria and yesterday we saw a 2 rocket attack on Israel which is now being blamed on a Palestinian group.
Let's remember that is was a war between Israel and Hezbollah last summer that helped push oil up to the $80 mark. Yesterday on the news it looked as though Hezbollah may have been the party that fired yesterday's missiles, an act which could easily have sent the two parties back into war. For now it looks like Hezbollah was not to blame, but it definitely brought back memories of last summer's bloody war.
Yesterday in Nigeria rebels attacked a flow station belonging to Eni SpA (NYSE: E) and took a dozen workers hostage during the raid. Things in Nigeria have been volatile for some time now, with the recent outbreak in violence coming after the April Presidential elections that left many citizens claiming a rigged outcome. Since that time the government has lifted prices on automobile fuel which has Nigerian oil unions now threatening a strike starting this Wednesday.
With traders already dealing the U.S.'s low refinery output, violence between the Palestinian Authority's Fatah party and Hamas and a rocket attack on Israel yesterday by a Palestinian group, the pospect of a potential strike taking place in Nigeria was all it took to push prices to a nine month high.
For now, I would continue to expect to see oil prices moving to the upside, and still feel that we are going to be seeing the precious crude tick up to the mid $70's by end of month.
Oil stocks were able to benefit from today's strength with several of the big boys trading up to new 52 week highs:
- Exxon Mobil (NYSE: XOM) - set an all time high of $86.58 before closing the day up 0.5% to $86.36 up $0.42.
- Chevron Corp. (NYSE: CVX) - hit a 52 week high up at $84.00 and closed the day up 0.3% to $83.39 up $0.22.
- Valero Energy (NYSE: VLO) - traded up to a hew 52 week high of $77.89 before closing the day up 1.0% to $77.30 up $0.80.
- ConocoPhillips (NYSE: COP) - hit a new 52 week high of $81.40 before finishing the session up 0.3% at $80.76 up $0.24.
- Sunoco (NYSE: SUN) - set a new 52 week high of $86.40 and closed the session up 1.1% to $85.84 up $0.92.
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Reader Comments (Page 1 of 1)
6-22-2007 @ 7:45PM
John Burnett said...
Do we have a memory disorder re refining capacity? Ever since the Clean Air Act of the 70's, the enviro-radicals have PREVENTED the building of new refineries! So,TWO-FACE, look in the mirror, NOT at the oil companies.