Why oil price are moving higher today

[dan_s]

For the 3rd day in a row, crude oil prices are spiking as the short squeeze morphs into a war premium. Saudi ground troops have entered Northern Yemen and seized control of two areas in the Saada province.

War is expensive. How long can Saudi Arabia afford low oil prices if they need to fund a war?

Will the rebels (funded by Iran) strike inside Saudi Arabia?

[dan_s]

NEW YORK (Reuters) - The short-covering frenzy in global oil markets extended for a second straight day on Friday, pushing U.S. crude up as much as 5 percent in morning trade, getting extra support from a rally in gasoline futures, before both began consolidating.

Combined with Thursday's jump, U.S. crude has gained more than 14 percent over just two sessions, which if sustained would be the biggest two-day rise since early 2009. It was also headed for its first positive week since mid-June.

"A severely oversold and shorted oil market is creating a bid for covering in U.S. crude," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

Some analysts also attributed U.S. crude's strength to concerns that Tropical Storm Erika was headed towards oil and gas installations in the U.S. Gulf, as noted on the U.S. National Hurricane Centre website.

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Funny to me is that just a few days ago the Wall Street Experts were saying oil was heading to $30. Now they say it was "severely oversold".

[bearcatbob]

Last week was a most welcome reprieve from a month of pain. Perhaps a bottom is in. I keep hoping to see NG move on production decreases and new industrial users coming into view.

[dan_s]

Natural gas is somewhat "off the radar screen" until some cool Fall weather arrives. Much tighter U.S. gas market this winter.