Oil Price

The oil price has had a very fine  run from a seasonal low point in mid - 2012. As with stocks
and home prices, the oil price has benefited substantially from the significant excess liquidity
generated via the Fed's QE program. With global economic growth having been slow over
most of the past 15 months, the ongoing supply / demand situation has simply not been
strong enough to support the nearly 40% increase in the oil price we have seen since mid -
2012. This is currently a seasonally strong period for the price of oil, but this interval is
only likely to run for another two to three weeks before the industry moves into a period
of seasonally weaker demand.

The global economy has started to firm up very recently, but this is well discounted by the
current price of around $107 bl. Oil traders will be looking carefully at the status of the
Fed QE program particularly since the price is currently quite elevated seasonally. I do not
think the economic case is there to support curtailing the QE program, but all the "taper talk"
from the Fed suggests this program may become tainted politically because of the wrong-
headed pushback it has received. The next FOMC policy meeting is a week away.

How about the situation with Syria? To get a sizable spike up in the oil price out of the
Syria situation would ultimately likely require not just the start of a US attack on Syrian
military targets but retaliation from Syria and / or its partners that would in some way
imperil a significant quantity of oil production. Consult with your local geopolitical
expert for more.

The COT reports from the futures market shows continuing very large long positions by
the major  speculative traders who tend to be wrong more often than not when they have
outsized positions on the books. This action has been mostly a play on support from QE
rather than Syria worries.

There could be a big payoff for long side oil players if an attack on Syria heralds a more
dangerous supply situation, but recognize the crude price is extended on the eve a period
of seasonally weak demand. WTIC Oil Price