Risk On Monday and Mid-East Violence Has Oil Breaking Out

By Tom Luongo in Gold and Oil News | November 20, 2012 0:25 |

Today’s massive risk-on move in the markets across the world today sent technical reverberations through a number of markets, gold and silver certainly.  But even though gold and silver put in good days, they did not clear significant technical hurdles and will need another strong day tomorrow to bring more momo-monkeys back on their long side.  Oil, on the other hand, did in fact break through short-term resistance to make a very strong statement about impending inflation.

Both West Texas Intermediate and Brent Crude futures close today at or above significant near-term peaks, sending a very strong signal that the markets are pricing in not only a fiscal cliff resolution and with it serious inflation but also geopolitical risk as Egypt has formally entered  into the conflict in Gaza.  Oil hadn’t responded to the situation last week because, some felt, that there were no oil producers involved.  But with Egypt stepping in the threat of a wider conflict and supply disruption is now very much on the table.

Brent crude futures closed on the Globex at $111.65 per barrel, just above the November 6th peak of $111.61 while WTI crude closed at $89.14, just shy of the November 5th peak of $89.20, but that was only after hitting a high of $89.79.  Both grades pushing through recent highs sends the message that bulls are willing to step in and support these prices and will likely attempt to push them higher.   With the election out of the way and so many Americans either out of work, working from home or had their new cars repossessed gasoline futures could rise back over $3.00 -per gallon and they wouldn’t cancel Christmas.

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