Reports of an explosion in a Saudi oil pipeline have sparked some fast paced movement in the prices of this commodity. For the first time since May, oil prices have climbed over $110 a barrel. While officials of this country have carefully worded their comments to imply that oil facilities were not impaired, it is not known whether this is the whole truth as yet. The pipelines that were reportedly damaged lie in the city of Awwamiya.
Even as the news broke in New York on Thursday afternoon, oil futures spiked briefly and then settled once more at below $109 price levels. Binary traders should take special note of these events if they are ‘invested’ in this commodity.
Rumours Can prove Dangerous
Phil Streible, a commodities broker in Chicago believes that the report is not quite true. He points out that rumours can be quite dangerous especially when they concern highly sensitive commodities like oil. Meanwhile, in a bid to keep things under control, the Saudi Interior Ministry has issued an official statement saying that a fire near the Ras Tanura refinery did not affect the oil facilities in the area. Rumours of sabotage were also dispelled by the official spokesman.
However, international intervention has already occurred in the tense situation in these parts in the form of the U.S.’s escalated warnings about joining hands with Israel against Iran. Given the simmering war between Saudi and Iran this intervention is likely to colour this episode too. In fact, the escalated warnings helped boost oil future prices in the U.S. market.
A Highly Volatile Market
According to the CE of the commodity market newsletter Barratt’s Bulletin, the alleged explosion and the effect of the news on oil prices only indicates how volatile the oil segment is. Price sustainability and price fluctuations are heavily dependent on socio- economic- politic happenings in the Middle East, he said.
For those trading in oil binaries, these are the hotspots to watch. The current situation is so tense that even a minor incident could snowball into a full fledged military manoeuvre in this part of the world. And if this happens, oil prices are bound to be impacted dramatically.