Monday, August 11, 2008
How weak is the oil market?
As we observed on Saturday morning, the non-reaction of the oil markets to the Russo-Georgia war suggests that the price still has some distance to fall. Forbes is reinforcing that point this morning:
The rapidly escalating conflict between Russia and Georgia spilled over into the oil markets on Monday, but the upward movement was more of a damp squib than a real rally.
Crude oil futures on the New York Mercantile Exchange rose to $116.42 per barrel, on Monday morning in New York, from $115.20, late Friday. European Brent crude, meanwhile, could barely manage a dollar gain, ticking up to $113.09 per barrel.
Although Georgia has no significant energy reserves of its own, it is a key link in the supply pipeline that connects Azerbaijan to the Turkish port of Ceyhan. Reports claim that Russia attacked the pipeline several times over the weekend, as part of its aggressive military response to Georgia's make-or-break bid to occupy the breakaway region of South Ossetia on Friday.
But just as a successful terrorist attack on the Turkish section of the pipeline last week failed to produce much of a spurt in oil prices, this latest threat is failing to overturn negative sentiment in oil, based on the gloomy demand picture. The investors who so feverishly jumped into oil earlier this year are now unraveling their positions, and the downward momentum is gaining almost as much traction as the upward momentum that took crude to $146 per barrel in July.
"I think it just goes to show just how bearish the market has turned," said Simon Wardell, analyst with Global Insight. "It's like it was when prices went up: it didn't seem to matter what bearish news came out, the price just kept going up."
Separately, you have to love this bit of transparency:
A journalist based in the Georgian capital of Tbilisi, who did not wish to be named, said that Russian forces had targeted the Azerbaijan-to-Ceyhan pipeline 26 times; it seemed unlikely, however, that Moscow would be interested in destroying the well-guarded transit route. He told Forbes.com that Russia was determined now to escalate the conflict to push for deep-seated change in Georgia, whether at the leadership level or at the policy level of its plan to join NATO.
A journalist does not want to be named for reporting that Russians had targeted the pipeline 26 times? Must have been a Russian journalist.
1 Comments:
By 
, at
Mon Aug 11, 04:21:00 PM:
I don't think the Russian security services target only Russians.
