Profit taking continued in the crude oil market as U.S. demand seemed to slow and a surging U.S. dollar shook out some longs in oil. The market also seemed concerned about comments coming out of Iran promising that if sanctions are lifted they could double output, and the Saudis promised a pause in Yemen bombing. Yet, reports that ISIS is gaining ground in Iraq and Syria could out some geo-political risk premium in the market today.
ISIS is gaining ground in Iraq and there are reports that they have gained control of the Baiji refinery. U.S. officials apperntaly are telling the press that Iraqi security forces are "all but cut off" at the Baiji oil refinery by ISIS and now only control about 20% of the facility.
In Syria, forces seem to be gaining ground against Bashar Hafez al-Assad the President of Syria, and there are fears that either ISIS or al-Qaeda may take control of the country. Reuters reported that the United States has started its "long-awaited program to train Syrian fighters to go into combat against Islamic State, the Pentagon said on Thursday, deepening America's role in Syria's civil war after eight months of airstrikes against the Sunni militants."
On top of that reports that Turkey's main opposition party says the Turkish government is set to send ground forces to Syria in the upcoming days to militarily intervene in its neighboring country is another reason for traders to worry.
On a positive note, oil prices seemed to weaken on reports that Saudi Arabia proposed a five-day ceasefire in Yemen so humanitarian aid can get into the country.
The other main issue for oil is the dollar. The dollar will take its cue from the April jobs report. For oil watchers this will be a gut-wrenching report as it will show big job cuts in the energy sector. Most of those are high paying jobs that won't be a net positive if its replaced by retail jobs. The report t is expected to show 224,000 jobs in April, with unemployment lower at 5.4%. Oil is taking a pause in what is a bull market. Use market weakness to put on bullish long term strategies.