Crude-oil futures are trading lower so far this Monday morning. There is becoming a fear that higher oil prices could damage the global economic recovery. Today’s move may just be proof that higher and higher oil prices end up curing high oil prices as eventually consumers and businesses curtail their driving. April oil futures are currently down $0.69 at $109.08 after last week’s gain was the largest in weeks
Supply disruptions due to Iran;s threats about trying to shut the Gulf of Hormuz and the equally important concern that Israel may strike Iran as it keeps up with its nuclear ambitions. Iran has effectively said it will not sell to the West now as the West has undergone a boycott.
The one issue which may be helping is the belief that the strategic petroleum reserve will be tapped to ease price pressure. Another possibility is higher margin trading requirements which could come at any time, and that would make it more expensive to speculate in energy prices.
The United States Oil Fund (NYSE: USO) is down 0.7% at $41.69 and the United States Gasoline Fund LP (NYSE: UGA) is down 0.6% at $56.81 in the pre-market.
JON C. OGG
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