A report on a military intelligence website that the U.S. is close to an attack on Iran may have contributed a good deal to the turnaround in oil prices this morning.
According to what's billed as an "Exclusive" on the Jerusalem-based English-language website, DEBKA,the Bush Administration is "closer than ever before to ordering a limited missile air bombardment" on some Iranian Revolutionary Guard installations.
While this may have helped spark oil’s $4 turnaround to climb back toward $130 a barrel, NBC's pentagon correspondent Jim Miklaszewski reports “U.S. military officials deny claims the U.S. is preparing to launch military strikes of any kind against targets inside Iran or the Gaza Strip.”
But traders already had their interest piqued about any news on Iran as the International Atomic Energy Agency's summer meeting is underway in Vienna. IAEA head Mohamed el Baradei continues to demand "full disclosure" on Iran's nuclear capabilities and up to now he doesn't seem to think the agency has gotten the real lowdown. Wachovia energy analyst Eric Wittenaeur says “how the IAEA’s meetings go today could prove important in determining whether or not the U.S. will have any support for such attacks.”
As far as today’s oil trade, veteran floor trader Ray Carbone of Paramount Options says whether DEBKA’s report of a possible attack on Iran is true or not, traders who are short the market have to cover or consider covering. “No one wants to be short,” with this possibility looming, he says. Also, any investor willing to take a shot at buying is more apt to do so now.
This isn’t the only news fueling the turnaround in oil prices. Motiva’s Port Arthur, Texas refinery is down due to a power failure and heating oil has surged 2.5 percent with 30 minutes left in the open outcry session. Natural gas has been up as much as 4 percent today with the Atlantic hurricane season now underway.
And the first named storm of the season, Tropical Storm Arthur, closed 3 Mexican oil shipping ports but spared any offshore oil or gas installations. However, the storm simply highlights the danger of supply disruptions as the closely-watched hurricane gurus at Colorado State University are set to update their forecast tomorrow. They've already predicted to be a very stormy season; just another reason for oil and gas prices to spike.
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