Risks of war may be on the rise after Saudi Arabia told all its citizens not to travel to Lebanon and urged those that are in the country to leave as soon as possible. The tensions are rising after the Lebanese Prime Minister Saad Hariri resigned in Saudi Arabia but is now currently missing and his party the “Future Movement” is saying that Saudi Arabia is holding him against his will. The Saudi Crown Prince is asserting his authority at home and abroad.
At home, he continues his corruption crackdown. Freezing the bank accounts and jailing members of the royal family. Now he is targeting Lebanon who he believes is allowing Iranian backed Hezbollah to influence Lebanese’s politics. The call to get out of Lebanon is being a possible signal that Saudi Arabia may be about to attack.
Already the crown prince said last week that a ballistic missile launched at the kingdom by Yemeni rebels was a "direct military aggression by the Iranian regime," and that it was an act of war. Lebanon is being a pawn between the Sunni Saudi’s and the Shia Iranians. The proxy war may boil over and turn into a direct Saudi virus Iran match up. Mounting political risks will keep oil supported.
This comes as there are signs that the global oil market is tightening significantly. Reuters reports that the amount of oil stored on tankers around Singapore has dropped sharply in the last months, in what they say is the latest indication that OPEC-led supply cuts are successfully tightening crude markets even as U.S. exports have soared. Reuters says that shipping data from Thomson Reuters Eikon shows around 15 super-tankers are currently filled with oil in waters off Singapore and western Malaysia, storing around 30 million barrels of crude. That is half the number of ships in June and down from 40 tankers holding surplus fuel in mid-2017.
This matches up with what we have been hearing from our contacts. Oil and product demand is soaring. Oil products like gas and diesel are tightening and we are in a major tightening cycle. Depending on the news flow many may not want to be short over the weekend. The fundamentals are becoming clear.
Snowflakes in Chicago. That is music to natural gas bulls. The EIA reported a +15 Bcf change in storage, that compared to the +54 Bcf change last year and +45 Bcf change for the five-year average.
With the first big cold front of the year descending on the nation, is it too early to be thinking about the Money Show in Orlando in February? Absolutely not! Go to the Money Show website and get signed up before space runs out. Make sure you stay tuned to the Fox Business Network all day long to get the latest on Politics and Money! We have kept our long-term bullish outlook on oil all year and now others are getting on board.