Oil Prices

[dan_s]

From CME Group: "January Crude Oil prices came under heavy selling pressure in overnight action following a groundbreaking agreement between World powers and Iran over the weekend served to tamp down supply concerns, as well as geopolitical risks. The net result of the agreement is that Iran will reduce their nuclear production program in return for an estimated $7 billion worth of easing sanctions. In the meantime, a measure of support for the crude oil that could be responsible for limiting further downside action is gains in global equity markets, prospects that Saudi Arabia might lower production to support crude oil prices and further violence in Libya. The Commitments of Traders Futures and Options report as of November 19th for Crude Oil showed non-commercial traders were net long 344,662 contracts, an increase of 3,270. Non-commercial and nonreportable traders combined held a net long position of 348,197 contracts, for a decrease of 1,737 in their net long positioning."

The is nothing in the Obama deal with Iran that will remove sanctions on Iran's oil exports - yet. My take is that Saudi Arabia will defend $100/bbl Brent by reducing exports if necessary, but that won't be necessary as long as Libya is such a mess. Libya is in total meltdown. It is now a big "Gang War".