Tuesday, May 18, 2010
Phil Flynn: Silver Linings
The reason for the stabilization may be the fact that Greece got its first installment of funds to avoid a default. According to the AP, Greece is to receive euro14.5 billion in bailout loans from other European Union countries, thus helping to stave off default on approximately euro 9 billion of debt due in a day or 2. The problem with the crude oil bulls is that they have been trying to shine a light on positive economic data as the reason to be blindly bullish on oil. What they have failed to realize is that the data is in part dependent on continued deficit spending and the printing of more paper money. Oil supplies may fall in Cushing, Oklahoma but they are still at a record and we have not seen the evidence that demand can over take the amount of massive oversupply. The price of oil is a product of dollar strength or dollar weakness.
Its relationship to just supply and demand was changed and we will live and die with the dollar.Is the Iran nuclear Issue solved? Bloomberg News reported that, "Iran agreed to hand to Turkey about half of its enriched uranium in exchange for fuel to run a medical reactor, possibly thwarting U.S. efforts to step up international sanctions over the Iranian atomic program.” Bloomberg says that, “Iran is ready to ship the low-enriched uranium for safekeeping in Turkey within a month of the U.S. and other powers agreeing to the swap, Foreign Minister Manouchehr Mottaki said on state television today. Within a year, Iran expects to get a shipment of reactor-grade fuel for use in the research reactor in Tehran, he said. “There is no opportunity or excuse for sanctions now.”Oh yeah.
The Voice of America reports that, "The United States is skeptical of the nuclear fuel swap agreement announced on Monday in which Iran says it will ship enriched uranium to Turkey. President Barack Obama's spokesman says the agreement will not slow the drive for a new U.N. Security Council sanctions resolution. The White House and State Department issued similar responses to the deal in which Tehran agrees to send about 1,200 kilograms of enriched uranium to Turkey. In return, Iran would receive medium enriched uranium for use in a medical research reactor. White House spokesman Robert Gibbs acknowledged efforts by Turkey and Brazil, saying it would be a positive step for Iran to transfer low enriched uranium as it agreed to do in October of last year.
But noting Iran's announcement that it will continue its 20 percent enrichment program, Gibbs said there is no change in the administration's position on Iran's nuclear program or Obama's determination to achieve new U.N. Security Council sanctions resolution. "It does not change the steps that we are taking to hold Iran responsible for its obligations, including sanctions," he said. Supply disruption concerns are secondary to global economic concerns.Short term we still feel the best way to play it is to play the ranges. Long term we are still bearish.
Phil can be reached at firstname.lastname@example.org And watch him everyday on the Fox Business Network!
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