Iran, China, OPEC, and Holiday Gas Prices

Volatile prices are the product of both fundamentals (e.g., supply, demand, and inventories) and headline risk. Speculative bets, which have been prevalent in the markets for weeks now, seemed poised to reposition—and could do so in a big way should underlying fundamentals shift. Third quarter demand appears set to outpace new supply additions, which indicates a draw on stocks. Refinery throughput increases should further support crude prices along with concerns over Libyan output and hurricanes forming in the Gulf of Mexico over the next few weeks.