WTI crude oil (
) continues its climb higher overnight to over $104.40 a barrel
before settling back under $104 handle at U.S. equities
open. Crude oil has not seen $104 handle since
Everywhere you turn the past 6-9 months, headlines boast how much
crude oil is being found with new technologies such as
fracking. So why the run up?
As many of you know, the answer to the question is the extreme
heightened political risk between Russia (
) and Ukraine, and U.S. and European Union threats to place
sanctions on Russia.
The issue escalated over the weekend when Ukraine pro-Russian
separatists failed to leave government buildings by Monday's
Reports over the weekend indicate that pro-Russian separatists
are well armed, fueling speculation that Russia may have supplied
weapons to the separatist, although this has yet to be
This new round of heightened turmoil has pushed the U.S. to
indicate it will impose additional sanctions against Russia if
Russia continues to test and push for encroachments in eastern
As tensions continue to mount between U.S. and Russia,
companies and crude oil traders grow more and more nervous with
Russia pulling its crude oil off the market. Russia is the
world's largest energy exporter.
Add in to the mix this weekend helping to push crude
higher are reports that there will be delays in exporting Libya's
crude oil. Market participants' were expecting Libya
to resume exporting by now. Officials and rebels continue
to fight over two of Libya's ports to the extent that Libya's
interim Prime Minister Abdullah al-Thinni resigned late this
weekend after threats were made on his family. He was
just made interim PM a month ago.
Crude Oil will remain inflated as long as Russia and Ukraine
remain at odds. Can crude oil move higher? Sure, if
Russia escalates the matter further, but Russia depends on crude
oil exports when we boil all things down.
But this does not mean we cannot play in the space. Later
today we will explore how to grab the sweet spot of each
morning's move in the crude oil futures in the Emerging Money
Trade Idea Section of the website. We will also look at a
way to play crude oil's move in the equities market. Be sure to
get your login now…