Oil and gold prices set to soar on the developing IRAN story

[swissaustrian]

Oil Rises to Nine-Month High as Iran Bars Inspectors From Base
Feb. 22 (Bloomberg) -- Oil rose to a nine-month high as International Atomic Energy Agency officials were denied access to an Iranian military base and said negotiations over the country’s nuclear program “couldn’t finalize a way forward.”
Futures climbed for a fifth day after the IAEA, the United Nations’ nuclear body, said Iran, OPEC’s second-largest oil producer, refused inspectors permission to visit the Parchin base during two days of talks that ended yesterday. Crude fell 0.6 percent earlier on reports that manufacturing activity slowed in Europe and China, signs fuel demand may decline.
“We’re just watching the Iranian story play out,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “What occurs in the market will depend on the developments there.”
Crude for April delivery increased 3 cents to $106.28 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Futures have gained 14 percent in the past year.
Prices fell after the American Petroleum Institute reported oil inventories rose 3.55 million barrels to a four-month high of 341.4 million last week. The April contract dropped 23 cents to $106.02 a barrel at 4:32 p.m. in electronic trading.
Brent oil for April settlement climbed $1.24, or 1 percent, to end the session at $122.90 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since May 2.
The European benchmark settled at a $16.62-a-barrel premium to New York-traded West Texas Intermediate oil. The spread was $1.21 wider than yesterday.
All Options
Israel and the U.S. have said all options are on the table in ensuring the Persian Gulf nation doesn’t acquire atomic weapons. Iran says its nuclear program is for energy.
An Iranian general, Mohammad Hejazi, said his nation would consider pre-emptive action when threatened, Fars news agency reported yesterday.
Speculation that oil supplies will be disrupted has increased as tension between Iran and Western nations escalates, David Greely, head of energy research at Goldman Sachs Group Inc. in New York, said in a report today. The bank maintained a recommendation that investors buy Brent contracts for July 2012 to take advantage of rising prices.
Iran said earlier this week that it stopped selling crude to France and Britain in a move designed to pre-empt European sanctions. The European Union on Jan. 23 agreed to ban crude imports from Iran starting July 1 to pressure the country over its nuclear program.
Biggest Driver
“The biggest driver of the market recently has been fear about Iran,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “There’s anxiety about what the latest sanctions will mean and what retaliation will take place. All of this keeps prices inflated.”
Iran pumped 3.55 million barrels a day of oil in January, according to a Bloomberg News survey of oil companies, producers and analysts. Its output trailed only Saudi Arabia among members of the Organization of Petroleum Exporting Countries.
...

http://www.businessweek.com/news/201...from-base.html

[swissaustrian]

It might be time to protect profits on the oil trade

U.S. weighs release of oil reserves, world frets about Iran
(Reuters) - The United States is considering a release from its strategic oil reserves, Treasury Secretary Timothy Geithner said on Friday, acknowledging the harm that supply disruptions from Iran could have on the global economy.
Rising tensions between Iran and the West over its disputed nuclear program have fueled a rise in oil prices, pushing benchmark Brent crude above $125 a barrel on Friday.
"There is a case for the use of the reserve in some circumstances and we will continue to look at those and evaluate that carefully," Geithner said on CNBC television.
"Obviously Iran can do a lot of damage to the global economy," Geithner said. "We are working very carefully to try to minimize that risk, make sure there are alternative sources of supply from Saudi Arabia and others to help compensate for reduced exports from Iran."
...

http://www.reuters.com/article/2012/...81N12120120224

[swissaustrian]

Brent pushes above $125 on Iran tensions
* Iran tensions, supply concerns support oil

* Saudi ups exports in past week

* Brent, U.S. crude RSI in overbought territory

* Coming up: CFTC positions data 3:30 p.m. EST Friday (Recasts, updates prices, market activity)

By Robert Gibbons

NEW YORK, Feb 24 (Reuters) - Brent crude prices pushed above $125 a barrel on Friday and headed for a fifth straight weekly gain on heightened concerns over tensions with Iran and cuts in supply.
News that Iran has sharply stepped up its controversial uranium enrichment efforts, in a report from the United Nation's International Atomic Energy Agency, pushed both Brent and U.S. crude to intraday peaks.
"The IAEA report caused this pop up," said Dan Flynn, analyst at PFGBest Research in Chicago.
Brent April crude rose $1.63 to $125.25 by 1:11 p.m. EST (1811 GMT), having reached $125.32, the highest intraday price since May 2.
U.S. April crude rose $1.47 to $109.30, having hit a high of $109.36, and up a seventh straight session, the longest string of gains since a 10-day stretch starting in late December 2009 and extending into January 2010.
Oil markets had already been reacting to fears about supply from Iran after Tehran said on Sunday it has stopped selling crude to British and French companies.
Other European buyers have cut back on purchases from Iran ahead of a European Union embargo on imports of Iran's oil effective July 1 and some of Iran's biggest customers in Asia including China have also reduced purchases.
"The supportive factors are on the supply side - Iran and Iran and Iran, with a bit of Syria and Sudan," said Christopher Bellew, a broker at Jefferies Bache in London. "It would not be at these numbers if it was not for the supply-side problems."
Saudi Arabia increased exports sharply in the past week and was offering extra supplies to its biggest customers worldwide in what industry sources said appeared to be a bid to tame rising crude prices.
U.S. Treasury Secretary Timothy Geithner said there was a case to tap the nation's strategic petroleum reserve in some circumstances.
Last summer, the Obama administration joined other Western nations to release a total of 60 million barrels of oil in response to supply disruptions in Libya.
Crude futures' recent rally has pushed a closely watched technical indicator, the relative strength index, above 70 for both Brent and U.S. crude. A reading above 70 is considered a signal of an overbought condition by technical traders, and a possible headwind for the current rally.
Brent's premium to U.S. crude CL-LCO1=R weakened to below $15 a barrel intraday, but recovered back to near $16.
Inventories at Cushing, the delivery point for the U.S. light sweet crude contract, fell last week. The Brent/U.S. crude spread had widened to more than $20 earlier in the month on rising stocks in the U.S. Midwest.
Crude trading volumes were tepid, with Brent turnover 32 percent and U.S. volume 35 percent under their respective 30-day averages just after the noon hour in New York.

http://www.reuters.com/article/2012/...8DO23D20120224

[swissaustrian]

It has been roughly three months now since I suggested protecting profits on oil longs on 2-24: see here http://www.ronpaulforums.com/showthr...=1#post4214413 and here http://www.pmbug.com/forum/f13/pms-r....html#post4822 WTI oil was at $109 back then and guess what: I picked the top almost perfectly Now WTI is trading at $82.93 and is massively oversold. This is the first reason to buy (chart is as of yesterday)



The second reason to buy is Syria which is increasingly under pressure from the US and it's European cheerleaders This emerging massacre theme smells fishy to me, like Libya 2.0. The only foreign obstacle for a "peacekeeping misson" (read: war) is Russia and it seems that the US and it's allies are just going to ignore them and the UN security council for that matter and will impose a "no fly zone" (read: assisting regime change by radical islamist rebels) under the NATO banner. Another obstacle is the US election, but it seems that the people running US foreign policy aren't caring about it. This would push oil prices higher: Not because Syria is a large producer, but because it is close allies with Iran and geopolitical tensions woulb be increasing therefore.

The third reason to buy are renewed QE3 speculations, as demonstrated by today's spike in gold. If QE3 comes, WTI is also going to surge because the USD weakens.

Conclusion: watch out for WTI, I'm opening a paper long now.

[puppetmaster]

It has been roughly three months now since I suggested protecting profits on oil longs on 2-24: see here http://www.ronpaulforums.com/showthr...=1#post4214413 and here http://www.pmbug.com/forum/f13/pms-r....html#post4822 WTI oil was at $109 back then and guess what: I picked the top almost perfectly Now WTI is trading at $82.93 and is massively oversold. This is the first reason to buy (chart is as of yesterday)



The second reason to buy is Syria which is increasingly under pressure from the US and it's European cheerleaders This emerging massacre theme smells fishy to me, like Libya 2.0. The only foreign obstacle for a "peacekeeping misson" (read: war) is Russia and it seems that the US and it's allies are just going to ignore them and the UN security council for that matter and will impose a "no fly zone" (read: assisting regime change by radical islamist rebels) under the NATO banner. Another obstacle is the US election, but it seems that the people running US foreign policy aren't caring about it. This would push oil prices higher: Not because Syria is a large producer, but because it is close allies with Iran and geopolitical tensions woulb be increasing therefore.

The third reason to buy are renewed QE3 speculations, as demonstrated by today's spike in gold. If QE3 comes, WTI is also going to surge because the USD weakens.

Conclusion: watch out for WTI, I'm opening a paper long now.

Thank You.....

[Zippyjuan]

I think two things have helped push oil prices lower- one is that the global economy is still weak and in many places (including the US now) weakening (the US basically went flatline as far as creating or losing jobs last month and Europe continues to decline) further. This will mean lower future demand for oil unless things turn around and pick up again. The Iran situation has for now stabilized with little change there which has also eased some speculation.

[swissaustrian]

Iran's presstv reports a 20 billion USD investment in the Iranian oil industry by China.
That's a giant middle finger to the US and it's allies. The clever Chinese just waited until the Iranians were really desperate due to all the sanctions and then they picked up the bargains.

China to invest USD 20bn to develop two Iranian oil fields: Qasemi

Iran's Oil Minister Rostam Qasemi says China has agreed to invest USD20 billion in developing north and south Azadegan and Yadavaran oil fields which will finally produce 700,000 barrels per day (bpd) of crude oil.

Speaking to reporters in a visit to the Petropars Company on Sunday, the oil minister said the agreement for developing Azadegan and Yadavaran oil fields has been reached after 10-15 years of negotiations with the Chinese side. He added that the Chinese side has started its activities by investing USD20 billion dollars in the oil fields.

“So far more than 20 drilling rigs have been installed in Azadegan and Yadavaran oil fields and plans have been made for the daily production of 700,000 bpd of crude oil [when development of both fields is complete],” Qasemi stated.

The minister said contracts have been signed for the development of 12 new oil fields in the past few months, adding, “Development of some fields, including Azar and Changouleh oil fields has also begun.”

Qasemi said necessary measures have been taken for the development of Darkhoein and Mansouri onshore oil fields as well as offshore fields such as Farzad A.

Yadavaran oil field is located in the southwestern Khuzestan Province bordering Iraq. The development project of the oil field is expected to be implemented in three phases. Upon the completion of all phases, some 300,000 barrels of oil are expected to be pumped out on a daily basis.

Azadegan oil field has one of the world’s largest oil deposits, with in-place oil reserves estimated at 42 billion barrels.

Iran holds the world's third-largest proven oil reserves and the second-largest natural gas reserves.

The country's total in-place oil reserves have been estimated at more than 560 billion barrels, with about 140 billion barrels of extractable oil. Moreover, heavy and extra heavy varieties of crude oil account for roughly 70-100 billion barrels of the total reserves.

http://www.presstv.ir/detail/2012/07...an-oil-fields/

[Zippyjuan]

China has been persuing long term goals and trying to secure rights and access to resources it thinks it will be needing to help their economy continue to grow. This is a key part of their national security strategy- not military power but economic power.

As for the Azadegan oil field, it is reported that while it may have an estimated 42 billion barrels in- place, only about 5.2 billion are presently considered recoverable (recoverable may change over time with changes in technology and the price of oil- at higher prices, some methods of extraction may or may not be worth using). http://en.wikipedia.org/wiki/Azadegan_oil_field

[swissaustrian]

Back on June 1st I decided to open a long wti trade (see above). WTI was trading at 83 then, it's trading at 95 now. It's close to overbought. The Syria situation plus the weakening dollar have pushed it higher. This might continue for a while but for me it's time to protect profits. I'm putting in a stop at 93.

[swissaustrian]

I haven't posted in this thread since early July now. And oil never climbed above 100 $ again and now it's trading at 90.

BUT something very interesting happened during the last few days:

1. The Tel Aviv stock index crashed and diverged heavily from the S&P 500. (remember Israel doesn't close markets for Christmas)



2. Oil massively outperformed stocks, bonds and other commodities today by rising 2.75%:



3. Iran is planning a naval drill in the straight of Hormuz, beginning tomorrow:

Iran will begin six days of naval drills in the Strait of Hormuz at the end of this week, an Iranian naval commander said on Tuesday, an exercise meant to showcase its military capabilities in what is a vital oil and gas shipping route.

The "Velayat 91" drills will be held from Friday to Wednesday across an area of about 1 million square kilometres in the Strait of Hormuz, the Gulf of Oman and northern parts of the Indian Ocean, said Habibollah Sayyari, according to Iranian media.

Iranian officials have often said that Iran could block the strait - through which 40 percent of the world's sea-borne oil exports pass - if it came under military attack over its disputed nuclear programme.

Sayyari was quoted as saying the new drill would test the navy's missile systems, combat ships, submarines and patrol and reconnaissance methods.

"In this exercise we will use the navy's newest weapons and tactics," Sayyari said. "Certainly we will observe the marine borders of neighbouring states and will carry out our exercises according to international laws and regulations."

A heavy Western naval presence in the Gulf is meant to deter any attempt to block the waterway.

http://in.reuters.com/article/2012/1...8BO03A20121225


Combine these facts and things are smelling very fishy...
Maybe we're up for a geopolitical black swan.