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Energy market guru Stephen Schork acknowledges that yesterday’s gain in oil prices was due to the instant escalation in the Middle East. But all things considered, the increase was pretty modest because there remains too much unused product in storage, he notes.
Brent crude contracts for December gained $1.35 to nearly $109.
“Given that you now have a bunch of pissed off terrorists (who are financed by Iranian petrodollars) talking about opening the gates of hell … we think 1.35/b is a pretty timid response,” Schork said.
He notes that the Department of Energy’s reported commercial stocks will have finished the month of October at the highest total since 1980 and the second highest since 1930. On Wednesday, the API reported a “strong” 1.35 million barrel build in crude oil stocks.
Schork says analysts forecast “a very large” 2.8 million barrel build for the weekly DOE crude stocks report released today.
This should continue to at least partly offset any pricing pressure caused by instability in the Middle East.
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