Schork Oil Outlook: Spill Politics Will Pressure Sector
If the engineers can’t plug Deepwater Horizon… then what chance do lawyers have?
In a television interview the other day with George Stephanopoulos, Democratic strategist James Carville registered his disbelief that the White House did not immediately seize upon Deepwater Horizon to exploit for political gain.
According to Mr. Carville, the president’s approval ratings “… should be up seven points right now if he [Obama] had come down here… I have no idea why they didn’t seize this thing…”
Meantime, the editorial board of the Boston Globe thinks that if BP’s top kill procedure does not work, then “… the government — and not BP — should determine the next move.”
The Globe’s opinion then went into its standard boilerplate alternative energy gripe… yada, yada, yada. The paper failed however to delve into the messy details on exactly what the White House should or could do to supplant BP, but the editors were adamant that that should indeed be the next course of action.
As stated in today’s issue of The Schork Report, it is one thing for Rush Limbaugh to rail against this White House… but the Boston Globe? Yikes.
Thus, with the White House coming under friendly fire, it is safe to assume it will ratchet up the rhetoric and look to turn the screws on BP to deflect this criticism.
Therefore, with the oil complex bracing for a barrage of blame when Obama travels to Louisiana tomorrow, the sector will continue to come under pressure.
The AMEX Oil Index dropped 1% yesterday to 931.58, despite a sharp 4% rebound in spot Nymex crude oil.
The Philadelphia Oil Service Index , 177.03, is now in the 38/50% retracement area from 178.80 to 163.21.
The CBOE OVX rose by around 2½ points to 43.45.
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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.