Friday, February 17, 2012

Today's Major Market Move: Brent Crude Futures Up Over 7% in February

There are no easy choices for the ECB as it has to continue to provide liquidity to overburdened European banks and nations yet at the same time contend with rising fuel prices. Front month Brent Crude Futures are up 7.5% month to date and briefly touched above the 120 level. Here's the line chart going back to the beginning of 2011:

Click here to go to the live chart.
WTI Crude is also rising and has gone up 4.7% in February so far and now sits over $103 per barrel. We get the feeling that anything over $100 starts to make the Federal Reserve a little uncomfortable. Although both Brent and WTI have been rising lately, the spread between the two has begun to widen again.

Click here to go to the live chart.
According to the WSJ, the latest gains in Brent are in large part due to geopolitical concerns with Iran and other oil producing nations in the ME and Africa:
Iranian tensions with the West remain a key focus for market participants, with a strong risk premium holding prices firm. This week focus has turned to South Sudan, Syria and Yemen where internal problems have caused severe disruptions to oil exports.

The combination of these elements is likely to keep prices elevated, analysts said.

"For as long as there are serious concerns about supply shortfalls and while optimism continues on the financial markets, the oil price is likely to continue to rise, especially since even investors with a short-term view will no doubt want to jump on the bandwagon now that the $120 [a barrel] mark has been exceeded," said Commerzbank in a note.

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