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The Iranians have secured more time with their murky weekend deal with the Russians regarding uranium enrichment. (Debka usually has the situation well analyzed.) They have also probably gotten enough time to avoid sanctions. The game the Russians are playing is also mysterious.

Like the North Korean situation, this one too will drag-out only to resurface in a more menacing manner in the future. But yesterday, energy markets sold off nearly as much as they rallied Friday. It’s a day to day circumstance in the energy markets. On the one hand current supplies are adequate and seasonally demand is weak. But each day geopolitical threats occur, prices will spike with the opposite occurring as tensions ease. As we’ve argued, energy is a hard market to either short or not be involved with. Naturally, XLE (Energy Sector ETF) has been our preferred position even though much reduced.

Commodity markets, like crude oil are said to be bullish when back month contracts (energy futures contracts including oil expire each month) trade at higher prices than front months. If you study the chain of current active oil futures contracts you’ll note that prices for future delivery are higher than the front (shorter-term) contracts. Clearly many traders believe that prices will rise since they’re willing to bet on that with carry costs for those positions rising.

In the meantime, XLE has been weakening which it should at this time of year.