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Oil got off to a strong start this day, with prices at one point moving up as high as $130.69 a barrel as fears of supply disruptions in Iran have kept the market bullish for the time being.
Prices cool off a bit and are now sitting at $129.40, but you can be sure that as long as the tension between the West and Iran persists, you’re going to continue to see prices that just refuse to come back down towards any sort of comfortable level.
Last week, we saw a pretty sizable drop in oil prices (see chart at the end of this post), which could be the main reason why this morning’s rally was not able to hold above the $130 mark. Investors are probably still a bit weary of betting that we have hit support yet. What really got the market moving early on was fresh threats from the U.S. that more sanctions would be imposed on oil-rich Iran should it not cease its current nuclear program.
I doubt I really need to rehash exactly what is playing out over in Iran, but in a nutshell, Iran continues to insist that its nuclear program is for purely peaceful means, and that it is merely looking to use nuclear energy. But America has doubts in this regard, and has been vocal expressing them. Lately, after Iran chose to flex its muscles by testing long-range missiles for two days, even more countries have started to express their concerns over the Iran’s future intent.
Over this past weekend, Iran was in speaks with six of the world’s leading nations, including America for the first time, but the speaks seemed to have tiny effect. While American spokesmen stated that the talks lacked any sort of progress, Iran said that it was a step in the right direction. This leads many to believe that Iran is merely trying to purchase itself as much time as possible.
The only real outcome of this meeting was that the six leading nations gave Iran two more weeks to comply, or face new sanctions. I don’t think there’s really much a question as to what Iran is going to do. It has already stated several times that it isn’t going to pull back on its nuclear program, no matter what sanctions come its way. Based on this, you’ve to assume that new sanctions will be proposed, and more threats will come from Iran, thus leading to more volatile oil prices in the not too distant future.
The one positive thing that we have the ability to talk about is that gasoline prices have been easing a bit. Over the weekend, the national average dropped a couple of cents, down to a tiny under $4.07 a gallon. I know what you are thinking — $4.07 is nothing to really be happy about, and I agree, but at least we saw a bit of cooling in prices.
I was lucky enough to find a Hess gasoline station over the weekend where I filled up with $3.77 unleaded. That’s the cheapest I’ve seen since I moved back to the Says last month.
What sort of prices are you seeing in your area? Are you noticing gas prices cooling off, staying the same, or actually moving higher where you live? Let us know what you are experiencing.
Here is a chart of oil so you can see just what we were talking about earlier:
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