RE:The market sees the oil supply is not threaten or tightenckwong wrote: During last night, the missle attack from Iran to US bases was considered by many opportunity to trade gold and oil. Oil future continue to decline and gave up most recent gain. Gold did similar but holds on to very little gain. Energy and gold stocks got hit pretty bad. The market does not believe US or Iran will start a war.
There is a couple points you may ask why the tighten situation was considered as war risk because:
1. American attacked Iran is illegally and invade Iran. Actually according to the UN, killing any terrorist in any part of the world is legal. Soleimani is considered a terrist by UN. So American's action is legal.
2. Iran launched dozens of ballistic missile may continue. Trump said no US or Iraqi lives were lost in the attacks and the bases suffered only minimal damaget. What does that mean? These missles did not have the expected result. Why? Your guess will be as good as mine until any report is published. But the downing of the Urkanian jet which had a very good plane safety record and good airline record could be the result of the heavy electro-magnetic defence set up by the American. This means more missle will not cause further damage.
To stop Iran, we have to identify what is the consequence of further military action by Iran. Military action satifaction may not be as important as losing money. Iran is one of the big oil supplier to China. If there is any attack to Saudi or to American, American retaliation will definitely destroy the Iranian oil fields which will cut the money flow. This may be the real reason that Iran will not escalate to a war.
Based on the last point, if Iran loses the oil production, who will suffer? The answer is mainly China. Cutting China's oil supply could be a page in the American's trade war playbook to curb China's economic expansion. Therefore, as long as no attack to the Middle East oil fields is confirmed, the crude future retreated. Even American attack the Iranian oil fields, the oil price may not rise too much.
I don't think Trump's speech will provoke Iran much. The risk to have Iran start a real war is low.
Just a word for EIA and API. From what I have been watching them for years, their numbers do not co-related to the energy price in a meaningful way. You can say either the statistics is not good or the commodity price is manipulated.
Some very good points ckwong!
Personally, I believe that the real reason of the downing of the 737 is more than an engine failure! Did someone accidently shoot it down?
Sadly, innocent people have died for no reason.
Kherson