Crude gained a lot last week and we are giving some of that back. The U.S. led a large attack in Iraq last week, one that wasn't unprecedented, but the media got a hold of it and the market reacted.
It's clear that supplies of crude oil and natural gas are more than adequate. The gasoline supply looked pretty tight a few weeks ago but the market responded and that's no longer the case. We are also getting closer to the end of winter and it's clear gas and heating-oil stocks will be sufficient.
It doesn't look like there will be any disruption in the near term. Iran relies on the money the oil brings in so they wouldn't be able to cut supplies for long.
Of course it's benefited from commodity prices, but it's growing organically well above average. They have a good inventory of projects to continue this above-average production growth.
Oil is being propped up by all the concerns that supplies will be interrupted. As long as the market thinks it's possible, we might see some more increases.
I don't see a catalyst to move prices much higher in the short term. Iran's not likely to cut exports anytime soon. We've had very warm weather this winter and have built gasoline supplies despite refiners operating at reduced rates.
We still have a refining issue. Refineries in other parts of the country have been able to increase output but they will have to go down later this year for maintenance. Refinery output will then fall below normal.
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