Commodities Essential - December 14, 2011

Besides price, what’s up with oil? Ask Iran … 

Currently, proponents of sanctions on Iran suggest there are sufficient alternatives to Iranian oil; but it’s no fun for consumers when producers are threatened by supply tightness should anything unplanned occur. Consumers seem to have adjusted to $100 per barrel and the corresponding $3.50+ per gallon of gasoline. But there will likely be consumer and political pushback if a spike in crude begets a spike in gasoline.

Technically, with a test today of its 200-day moving average support, crude oil is suggesting it could move lower from here. I’d like to see it close below that level to confirm. But I’m not sure how long or for how far it could sustain a move lower as I figure the Iranian situation (as it currently stands) likely puts a floor under crude at about $85 or $90.

But I am considering a short-term position to play for weaker crude prices

Commodities Essential. 14 December 2011

Trade Essentials.

No new recommendations or adjustments at this time.