After yesterday's one day sell off in oil, prices have once again moved to the upside in today's trading. The main reason for the upward move today comes from Nigeria, where a strike has created supply fears and pushed oil back up over $69 a barrel. We discussed on Monday that things in Nigeria have been tense for a while, and that the country's oil unions were planning to start a strike yesterday in reaction to increases in automobile fuel prices by the government. The strike got under way yesterday and has the potential to halt close to 2 million barrels a day from the country.
With all of the other upward pressure on oil these days, a 2 million barrel a day cut from Nigeria is definitely going to force prices higher. As we started out this week it looked as though seeing prices trading above $70 by the weekend was pretty much a no brainer, then yesterday's rise in inventories helped bring prices down and had many analysts out there starting to claim that oil was in danger of topping out. I don't agree with that idea just yet and stated yesterday that I thought it was going to be a quick pullback and then we would get back into the current rally. With today's move, it's looking much more likely that we'll see prices cross through the psychological $70 barrier tomorrow.
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