Libya Protests Drive Oil Markets Upward (USO, UNG, GLD)

Energy traders in Europe are reacting to the outbreak of violence surrounding Libya’s political protests with concern. Unlike Egypt or Tunisia, this is a major OPEC oil producer.

West Texas crude (WTI) is up 4% in European trading this morning and the European benchmark Brent contract (Brent) is up about 1.5% at over $104.

Naturally, all this action should push oil investments like U.S. Oil ETF (NYSE:USO) upward in sympathy once U.S. trading reopens tomorrow.

If this uprising spreads to Algeria and Iran, OPEC starts to have big problems.

Iran moves two warships through the Suez Canal on Tuesday and there are even signs that the eastern Saudi oil fields in Bahrain are exposed to unrest there.

The upside is that North American oil inventories in particular are well supplied right now and there is still spare capacity of 4.5 million barrels a day or so in Saudi Arabia.

The real trades are gold — SPDR Gold ETF (NYSE:GLD) — due to the global safe haven bid emerging here, and in the long term possibly natural gas, as embodied by funds like U.S. Natural Gas ETF (NYSE:UNG).

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.

Leave a Reply

Your email address will not be published. Required fields are marked *