Schork Oil Outlook: IEA Playing 'Chicken' with Oil Market
Greece is burning… and the U.S. $ is still weak!
The cradle of western civilization is disintegrating right in front of our eyes, Egyptian protestors are still hurling stones in Tahrir Square, Muammar is hanging in there and the AFP reports that Iran, the largest sponsor of global terrorism, has been “…carrying out covert ballistic missile tests and rocket launches, including testing missiles capable of delivering a nuclear payload in contravention of UN resolution 1929."
Yet, in spite of these headlines, the USD$ still cannot attract any buying interest.
Wasn’t the dollar once considered a safe haven currency? For the time being, obviously not.
As far as the real safe haven currency is concerned, the Swiss franc, the CHF/USD cross, is trading at all-time highs. Meanwhile the EUR/USD cross is testing resistance at 1.4455. Most importantly, the USD is once again sinking against the Canadian dollar (CAD).
The CAD had dropped 1.8% to a low of 1.0088 in the aftermath of last week’s intrusion by the IEA. Last night the CAD/USDcross bounced back to 1.0316. Given that the Loonie is a key commodity currency, this rebound does not bode well for those expecting knock-on weakness in oil markets from last week’s government sponsored margin-squeeze.
Bottom line, last Thursday the IEA challenged the oil market to a game of chicken. As written in today’s issue of The Schork Report, this is a risky gambit. After all, the SPR cannot compensate for headline risk.
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Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.