(IBTimes) - The bullish oil price scenarios are giving way to
what seems to be ever mounting supply. Mario Draghi failed to
provide any real simulative hopes and we had a weak ISM
nonmanufacturing data report that lowered demand expectations and
so we have growing odds of a continuing price collapse. In the
beginning of the year on my oil outlook, I said that oil would be
in a range between $100 a barrel and $110. I said if the market
feared that we would be on the verge of war with Iran we would be
closer to $110 and if we were less worried closer to $100. It
appears the market has played that call out almost exactly but
now it seems that with Iran on the back burner and Iranian supply
almost replaced by rising OPEC production, the odds are
increasing that $100 a barrel may fall.
Of course with weak demand for gasoline my call that $3.00 a
gallon gas was more likely than $5.00 a gallon gas that you can
find online on MarketWatch Radio. Of course back in February when
I made that prediction many were calling for $5.00 a gallon. The
crude market was surging, refineries were closing and it seemed
like the world was preparing for war. Yet the odds of war in the
short term is unlikely and with the all the preparations that
have been made ahead of a potential war, the risk of losing
Iranian crude has largely been negated.
Consider for instance the announcement by the UAE that their
long awaited pipeline to avoid the Straits of Hormuz. Reuters
News reported that, "The UAE's strategic oil pipeline for
bypassing the Strait of Hormuz is complete and exports are
expected route out of the narrow strait which Iran has threatened
to block as western pressure to limit its oil revenues has
intensified."
About Fracking Time! The Wall Street Journal reports that the
Obama administration will soon issue sweeping new
environmental-safety rules for hydraulic fracturing on federal
land, setting a new standard that natural-gas wells on all lands
eventually could follow. The rules, which are likely to be
unveiled by the Interior Department within days, are designed to
address concerns that the method of extracting natural gas known
as "fracking" can contaminate groundwater. Among other things,
they create new guidelines for constructing wells and treating
waste water, according to a draft of the proposed rules reviewed
by The Wall Street Journal. At the same time, the department
loosened a proposed requirement for companies tied to disclosing
the chemicals they use to extract natural gas from the earth,
after the industry complained an earlier version would slow
drilling too much. The change, which disappointed
environmentalists, is a fresh sign that the administration is
heeding industry concerns after Republican complaints of
overregulation. Last month, the Environmental Protection Agency
gave the industry two years to comply with new air-quality
standards for oil and natural-gas wells after the industry
complained it would be difficult to meet new standards. A must
read!
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Original Source:
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