Phil Flynn | Price Blog
Is this real or is it a game? Oil prices got a boost on a report that Russia and Iran were planning war games in the Strait of Hormuz. A very strange game. The only winning move is not to play. Ok, maybe they called them military drills. This came after the U.S. embassy in Berlin formally asked Germany, France and Britain to participate in a mission to secure the Strait of Hormuz and combat recent Iranian aggression, raising the stakes and the potential for a conflict. Did you ever play tic-tac-toe?
Yet what may actually solidify the oil market bottom may be a very bullish American Petroleum Institute (API) and the fact that our friends at the Fed will go ahead and cut interest rates. This move as the economy is still relatively strong will only boost oil demand.
The big draw in U.S. crude supply really hurts the bearish oil case. The API not only reported a much larger than expected 6.024-million-barrel crude draw but a 1.449-million-barrel draw from Cushing Oklahoma and a big 3.135 million barrel drop in gasoline supply. It’s clear that gasoline demand will heat up as the consumer confidence index jumped to 135.7 in July, an 18-year high, from a revised 124.3 in June, according to the Conference Board. Distillates were in line falling by about 890,000 barrels.