We're seeing some relief in the price of crude oil today after yesterday's spike above $102 a barrel on news that Enbridge Energy Partners (EEP) had purchased Conoco Phillips' (COP) 50% stake in the Seaway oil pipeline. Enbridge's intention of reversing the pipeline flow to send more crude to Gulf refiners is what sent prices of West Texas Intermediate crude soaring. In the attached video TradeMonster.com co-founder Jon Najarian discusses the implications of Enbridge's move, spiking crude prices, and the implications for Americans.
Oh yeah, we also discussed ways to trade a move higher in crude products.
While the Enbridge acquisition is new, WTI crude oil has been moving higher for a month. The U.S. pricing benchmark has ramped from about $75 to above $100 a barrel in just the last month. The rise closed the spread between WTI and Brent crude oil from nearly $30 to under $9. Brent remained relatively flat over that time period and should offer slight relief to those concerned about prices at the pump, given that the international oil benchmark is more highly correlated to our gasoline prices. But only slightly.
"Emerging market demand, especially for diesel, is at record highs," Najarian notes. "We're not going to see lower prices unless we put a lot more supply on the market."Read More »from Why Crude Oil Prices Spiked & How to Profit From it