Weekly Crude Update 8.15.2012

The Israel and Iran geopolitical tension remains a tell tail of where this spread is headed in the short-mid term. Sources say that diplomatic solutions to the tensions are still on the table, and as long as they do the spread will remain in control. I would long the spread in anticipation of a nonviolent solution to the problem. As you can see from the chart below, the spread is much wider than the historical average.

Today’s U.S. crude reserves number should cause a short-term price spike in WTI crude. Right now analysts are expecting high reserves due to lack of demand and increases in supply and crude imports.

CrudeSpread

David Cornes holds a degree in economics from the University of Montana.

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