Holy Ahmadinejad! Iran up in arms! Get out the billy clubs as it looks like Iran and oil is having a post election insurrection. Iranians are crying out "death to the dictator" and "God is great" just the way they did before the 1979 revolution when they doubt the legitimacy of Iranian President Mahmoud Ahmadinejad supposed re-election. It seems moderates have no place in Iran as Hossein Mousavi, the main opposition candidate, might or might not be under house arrest. The New York Times says, “Violence and acrimony over Iran's disputed election intensified Sunday, with word that authorities had detained more than 100 prominent opposition members, riots erupting in Tehran and other cities, and the incumbent hinting his top challenger could face punishment for calling the result a sham.”
The election got approval from Iran's supreme leader, Ayatollah Ali Khamenei who said the outcome was fair and that should have put an end to it.
Yet it has not and the unrest if it continues will attract the attention of oil traders. It was 10 years ago the government was able to get the protests under control and it remains to be seen if the they can again this time. The New York Times said, “Ahmadinejad dismissed the allegations of fraud, saying the victory had given him a bigger mandate than ever. He criticized Mir Hossein Mousavi, the main opposition candidate - who remained at home Sunday with security forces closely monitoring his movements - in a veiled statement that many saw as a threat. "He ran a red light, and he got a traffic ticket."
Why do many people in Iran think the election was stolen? The Times reports that, "skeptics continued to assail the government's declaration that Ahmadinejad had won with 62 percent of the vote - more than 24 million ballots. The government said Mousavi received 13 million votes and that two other candidates, reformist cleric Mahdi Karroubi and former Revolutionary Guards commander Mohsen Rezaie, received fewer than 1 million votes each. Mousavi advisers and supporters called the reported results preposterous, given the challenger's strong support in Tehran, a city of more than 12 million, and in Azerbaijan province, his home area. They also cited the fact that Ahmadinejad's reported vote far exceeded his tally when he was first elected president in 2005." We need to stay tuned to this.
Oil is the weak star due to dollar strength. Dow Jones says that the dollar has climbed against most other major currencies in the European trading session, as investors showed relief that the weekend's meeting of the world's leading finance ministers generated nothing to shake the currency's reserve status.
Are we getting close to a bottom on natural gas? Well the best chance for a bottom comes when supply crosses the abyss of demand and that is the key. In other words natural gas will rally when weak demand inspires enough of a cut back in supply so prices go up. On Friday Reuter’s news reported the Baker Hughes rig count report showed that the number of rigs drilling for natural gas in the United States fell 15 to 685 on the week. This is the first time rig counts fell below the 700 benchmark since late November 2002. Reuters says that, ”U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September, and now stand at about 819 rigs, or 54 percent, below the same week last year, the lowest level since late November 2002, when there were 679 gas rigs operating. Near record-high gas production last year and a deep recession that sharply cut demand led to a severe oversupply that pressured gas prices this spring below the $4 per mmBtu (million metric British thermal units) level from their peak above $13 last July. The 75 percent slide in natural gas prices over the last 11 months and tighter access to credit have forced many producers to scale back drilling operations. With the natural gas drilling rig count finally below the 700 mark, most analysts expect to see year-on-year output declines soon, probably by early summer, which should help tighten the overall supply-demand balance.
Currently Natural gas storage is more than ample. Last week total gas in storage came to 2,443 Billion cubic feet which is 30.3% above the five year average. Still most of the demand needs for gas are met by production and we are getting close to where these production cuts could get us thinking of a long term strategy.
Weather could be key as an unusually cold pattern has blanketed much of the country. This means electric demand may fall. Still a change to hot weather with production cuts could give us a boost. This might be a great time to do some bullish option plays call me for some ideas.
Happy Monday and call me to open your account at 800-935-6487 or email me at pflynn@alaron.com. And see me each day on the Fox Business Network!
We're long July crude from apprx 5959 – stop to 6990!!!
Buy July heating oil at 17200 - stop 16700.
Buy July RBOB at 19000 - stop 16900.
Buy July natural gas at 330 - stop 290.
