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Commodity Daily News
Pirates Stir the Oil Market
Tuesday, 18 Nov 2008
There was a spike in Oil prices yesterday as pirates hijacked a Saudi super tanker off the coast of Somalia. The ship contains 2 billion barrels of Oil, or 1 day of Crude output from Saudi Arabia. When the news broke, the price of Oil jumped almost $3. But the gains were short lived. Within 4 hours, the price of Crude was in the red for the day.
This is an event that is unprecedented in scale, but underscores the bearish momentum in the market for Crude. An event like this can temporally move the market in the short term. However, it is not enough to reverse the long term negative outlook in the market. We may see the price of Crude head lower to the $40 mark.
