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Politics : Welcome to Slider's Dugout

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From: onginvester	8/21/2006 10:25:54 AM
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Sliders going to luv this..... From Phil Flynn of Alaron Trading Here is the lowdown on the Iranian showdown: oil prices have seen their low for the year. And if they have not, then I think it's entirely possible we will see the low this week. The showdown with Iran lies ahead as well as the shaky ceasefire between Lebanon and Israel. Yet what goes beyond those worries is the new normal trading pattern of oil that seems very well established. We know that Iran is just not going to give in to the world community regarding their nuclear pursuits so we will have to have a floor for oil. The risk premium for oil will increase at some point as the crafty Iranians may at some point try to make their point by using oil as a weapon! Yet even if Iran wasn't playing its little game of nuclear chicken with the world, oil seems to be following the same playbook. We sell off near expiration and edge a bit higher on the next go around. At this point it seems the market has already adjusted for its normal seasonal slowdown in demand despite the fact that the drop-off this year may not be as pronounced as in years past. And all too soon the market will being its yearly cold weather worry as we head into the upcoming winter heating season. Why does it appear likely the market will worry as supplies seem adequate? Well mainly because that's what traders and markets do best. Still with seemingly large supply, the distillate market is dealing with extremely strong demand and stricter regulations. The new low sulfur diesel regs should provide enough uncertainty and even perhaps in some cases a tightening of supply. And of course we can't forget that we have to buy the rumor before we sell the fact. With autumn leaves ready to fall, those trading heat and oil are going to have a ball.

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