Crude Awakening

Written By Luke Burgess

Posted August 8, 2005

I have a morning routine. When I walk into the office I grab a cup of joe, turn on my PC, check my email and then check oil prices.

This morning I was mid-sip when I saw the overnight prices. I choked. Hot coffee came shooting out through my nose. Through my watering eyes I saw it. $62.90!

What a crude awakening! A nice way to start the week if you’re long oil, which we are.

It seems that the bounce came on news that the U.S. embassy in Saudi Arabia has closed due to security threats.

Embassy officials have decided to close the building for at least two days.

An embassy press officer said that the closing is in response to intelligence suggesting an attack was imminent.

The embassy also reiterated advice to American citizens to be especially vigilant and to take appropriate steps to increase their security.

A statement posted Saturday on the embassy’s Web site warned of "ongoing security concerns in the region, including for seaborne vessels traveling in the southern Red Sea."

While no specific details were provided, today marks the 7-year anniversary of the 1998 embassy bombings in East Africa that claimed the lives of over 250 Kenyans, 12 U.S. citizens, and injured more than 4,000 innocent people.

Over the weekend I listened to Mike Schaffer’s interview with Matthew Simmons again and it shocks me each time I hear Mike and Matthew talk of oil being cheap.

You’d be hard pressed to convince anyone standing at a gas pump that oil is cheap.

While oil is 40 percent higher than a year ago though crude prices would have to surpass $90 to reach the inflation-adjusted high set in 1980. But many energy pundits believe that this is right around the corner.

Late last Friday OPEC announced that it would increase its output by 300,000 bpd. But even that wasn’t enough to stifle today’s oil price.

– Luke Burgess

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