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Coincidence is funny because it always happens at the same time…
Let’s start with the easy and obvious pairing, that being the fact that the Greek government maintains its existence. This has been interpreted as meaning that Greece and Europe in general, will not, for the time being, be sucked into the economic abyss.
Coincidentally, the price of crude, especially the rebellious Brent, rose and the U.S. dollar fell. This shadow boxing of the Euro and the dollar will continue on for some time resulting in daily swings that have no bearing on inventory or refinery run levels.
Personally, we believe that Greece will be saved, but the supply problems in North Africa will persist thereby keeping Brent crude prices significantly higher than WTI, placing upward pressure on WTI to justify it as a bench mark crude.
Recently, the U.S. Federal Trade Commission (FTC) announced that they would be initiating yet another investigation into possible price manipulation by the oil industry citing statements by eager-to-be-re-elected politicians saying that profit margins had nearly doubled since the start of this year yet refinery runs were 7% lower than those of a year ago. Coincidentally, two days before this announcement, we had prepared a report that showed that the crack spreads in Canada had increased by the following amounts versus a year ago, not since the start of the year:
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By: Roger McKnight, Senior Petroleum Analyst