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By Tim Seymour

OPEC deals in Brent (BNO), not WTI crude, and this is the benchmark to watch if you think the Egypt situation is spiraling toward a Suez Canal shutdown. Additional Middle East tension, Syria, Turkey, Iran -- these all play into the supply disruption trade that really hasn't taken place yet, but is getting closer to breakout levels.

Brent has moved 5% since the Egyptian (EGPT) situation began to simmer. This move does not begin to show the supply disruption bid that began in the advent of the Arab Spring and the revolution in Tunisia. From mid-December 2010 to April 2011, Brent moved 45% mostly on supply disruption fears in addition to a rebound bid in global IP.

Currently, the levels to watch are $106.50 and then $110.00/bbl, as these would elevate out of the 3m trend. Are markets more sanguine about supply disruption when global growth is pausing? Yes, and there are many who have a view that oil always lags the move in other commodities and this time is no different.

Conclusion

If there is an Arab Spring redux moment coming, oil hasn't even begun to price in the fear. But if there is not, fading this rally may in fact be the opportunistic trade.

Source: Arab Spring Impact On Brent Oil