Crude Effects of Terror
August 10th, 2006 by Grant in: Oil & GasOur friends in Britain have thwarted another attack through the arrest of 21 individuals with plans on detonating liquid explosives aboard airliners over the ocean.
While many terror attacks have a bullish affect on the oil markets, this one seems to have a bearish effect on oil prices. What gives?
Well, the real effect on this terror plot would not lie with supply of petroleum products, like many other events would endure, such as terrorist events on pipelines or general geopolitical events in petroleum producing nations.
While those events put supply into question, this recent event puts demand into question. Will the general public be as interested in travel in light of recent events? Will the thwarting of a major catastrophic event curtail air travel? For the time being, yes. But I also look at it as an opportunity to shift travel from the air to the ground.
Rather than travel by air where safety at the brunt of speculation, travel by car, I feel will continue to rise, and so will prices at the pump, long term.
In other crude news:
Wednesday the EIA released the weekly strategic petroleum reserve levels for the week ending August 4, showing a drawdown in crude by 1.1 million barrels, as well as a drawdown in gasoline inventories by 3.2 million barrels.
As for natural gas storage ending August 4, a drawdown of 12 bcf was realized as electrical demand has increased as a result of higher temperatures for that week.
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