Oil surged 12% to $42.20 per barrel early Monday, before easing some to $40.24, as Israeli jets continued to knock out Hamas targets in the Gaza Strip. Energy Trader Jim Dietz said the raids, aimed at destroying rockets fired by Hamas into Israel and eliminating other Hamas strongholds, have the capacity to change the oil market's dynamic, if a cease-fire cannot be reached or if the conflict escalates.
"It certainly can be a game-changer regarding the oil market. We're likely to move higher obviously on geopolitical tension, but at this stage it's too soon to tell if there will be a unified response from oil producing nations in the Middle East or other ramifications," Dietz said.
The other major energy commodities also jumped on the Israel / Hamas conflict early Monday. Heating oil rose 7 cents to $1.32 per gallon, unleaded gasoline increased 6 cents to 91 cents per gallon, and natural gas gained 17 cents to $6.00 per million BTUs.
Also, Dietz said China's decision to stockpile crude is another, new bullish sign for the oil market. "China views oil's low price as an opportunity to add to its strategic reserve at a bargain price," Dietz said. "If other nations follow that could put a floor under oil around $35 a barrel."
Absent the above, and if a cease-fire is reached between Israel and Hamas, Dietz said oil will continue to trend lower, toward $30 per barrel, on decreased U.S. and global oil demand, due to the global recession.
Oil Analysis: Middle East tensions are always capable of 'distorting' market fundamentals, but the view from here argues that OPEC is not likely to forward a unified response, if the conflict remains short.
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Reader Comments (Page 1 of 1)
12-29-2008 @ 1:09PM
nick said...
What the Arabs need is to have Israel really whip their ass big time. Put Syria and Iran back to the stone age and maybe some of the other Arab states would come too. Hamas needs to be taken out. Their is no chance of peace with these thugs bent on killing as many jews as they can. Their still thinking their going to get some virgins in the next life, what they need is a M-16 put on automatic and shoved up their ass. The Obama machine will be like little lost sheep, the 3 year wonder boy will show his true colors in a few weeks.
12-29-2008 @ 2:27PM
lane said...
As many jews as they can? You mean less than 5 over a two week period compared to over 300 Palestenians in a 3 day period?
It's plain as day to see that Hamas is wrong, but Israel shares blame in this situation too, it's not as black and white as you make it seem.
12-29-2008 @ 2:49PM
Bill said...
"There were also hints from China the government could go on a crude-buying spree to take advantage of prices below $40 a barrel. A senior government official writing in the People's Daily said China wants to increase its oil reserves to cushion supply shocks that it believes are inevitable.
China is encouraging companies to use all spare petroleum storage capacity to take advantage of the current low prices, the official said.
Asia's biggest refiner, the state-owned China Petroleum & Chemical Corp., recently completed construction of its largest storage project, a 38-tank facility with a total capacity of 32.4 million barrels. "
Soon the real world industrial superpower will stand-up. Then America will discover the stupidity of their hubris, and how we squandered our wealth, democracy and opportunity.
12-29-2008 @ 4:34PM
william lindblad said...
Other than a reason for speculation - there is nothing to this ongoing conflict that should drive the price of oil. Syria, Israel,Lebanon, Jordan and Egypt are not oil producers. Besides, how long as this been going on. At least 50 years and there still is no solution. Until all the involved parties are willing to sit down at a bargaining table, make agreements, and than live up to them nothing is going to change.
It is highly doubtful, that while sympathetic, Iran or any of the other major Arab nations is going to get into the foray too deeply. Since they are the ones with the oil, price changes are speculation.
Maybe Hugo Chavez should rattle a saber.