It seems oil prices went on a wild ride after a wee bit of blarney sent oil falling faster than the sun going down on Galway Bay. A report from Reuters News cited two British sources that said Britain had decided to cooperate with the United States in a bilateral agreement to release strategic oil stocks in an effort to prevent high fuel prices rom derailing economic growth in a U.S. in an election year.
Now if that were true that would be against everything our Strategic Petroleum Reserve was supposed to stand for and would be a reckless act in a time when we are facing a great threat to supply. Now while Prime Minster David Cameron thinks the world of Barrack Obama, the American people seem to be a little les fond of him. As gas prices go up, the President's poll numbers go down. Reuters said that a formal request from the United States to the UK to join forces in a release of oil from government-controlled reserves is expected shortly.
Well after the oil gasoline and heating oil market tanked and before the outrage and indignation from the President's critics could set in, the White House denied the story saying that the report of agreement on oil release was inaccurate. Inaccurate or not we know that an SPR release is on the minds of the leaders. In Europe and members of the International Energy Agency are against a release of oil at this time as they should be as the marketplace has already adjusted to the expected loss of Iranian oil due to the European embargo. High prices have slowed the hording and more oil now may just mean more hoarding.
Now if Obama and Prime Minister David Cameron are just using our valuable resource to win a few political polling points that would be a very bad thing indeed and could actually do more harm than good. While the drop in price may make us feel good for a couple of days, the truth is prices would go back up soon and it would hurt the power of the reserve. The reserve is there for emergencies not for political reasons. It is like a hot day in the summer in the city of Chicago. Kids in the city sometimes turn on fire hydrants to get some relief. Yet what happens is that when the fire hydrants are opened, all over the city the water pressure goes down and if there is an actual fire the water may not reach the building and the house burns down.
Now if you want to give the President and Prime Minister the benefit of the doubt, the reason they may be getting ready to release oil from the reserve may be because they know something that we do not know. Obama has been saying that the window of diplomatic opportunity with Iran is closing. Perhaps that was the reason.
Yet oil should be rising with the stellar economic data. The bond market is rising, slowing major advances. Still with the swift banking system cutting off Iran's banks and Iran's President Ahmadinejad getting called to the carpet, upside risks remain. Yet technically we are looking heavy. Risng WE rates and a strong dollar may keep oil from going too far!
If you are not feeling the luck of the Irish it is time to tune into the Fox Business Network where you get the Power to Prosper and me every day! Also make sure you call me - Phil Flynn - to get my latest updates - the Daily Trade Levels! Just call me at 800-935-6487 or email me at firstname.lastname@example.org. Have a Happy St. Patrick's day!
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