Wednesday, August 28, 2013

All eyes on Syria as we wait on heating oil

With the ever increasing possibility of US military action toward Syria, markets reacted accordingly adding what I would consider a "fear premium."

While Syria itself is not a large oil producing nation, the potential for the conflict to spread throughout the region, as well as the impact action might have on Syrian allies, drove up the price of crude oil to an 18-month high. RBOB and heating oil also ended the day sharply higher while the broader markets sold off heavily.

Markets certainly don't like conflict (see Libya 2011) and it's impossible to know exactly how everything will unfold.

I'm still watching the Dec13/Mar14 spread with an eye to getting in over the next month should things settle down. The conflict in the middle east has the potential to help this spread overshoot the mark and give us an excellent entry point. But I won't be jumping in too early.

Proceed with caution...

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