"Investors looking for sell signals for a position in oil and oil service ETFs might want to take note of a recent spike in crude futures. On Tuesday, just before 5PM in New York, crude oil traded to an astonishing $68 a barrel, up on rumors that a rescue attempt had been organized for the British military personnel held by Iran. An hour later crude was back to $64.10 a barrel. This 6% spike upward and subsequent move downward may presage the direction of oil in the remainder of the week and going forward."
"). As the chart below shows, USO is up 6% since Thursday. XLE, which holds mainly refiners, is not far behind."
"The capture of British naval officers is no rumor of course. But it is not the sole cause for the increase in oil prices. In fact, as the chart shows, the biggest single day move upward was last Thursday, before the conflict erupted. At the time investors speculated that the rise in oil might be due to expectations that refineries would be buying more crude going into summer driving season. Then the capture of British military personnel in the Gulf took oil up higher. Iran claimed that the British were encroaching on Iranian waters. Thursday's rise seemed prescient."
"But overall the move was well-timed with another event: the U.N. Security Council vote to tighten sanctions against Iran. More than once Iran has provoked the West in critical times as a means of signaling its military capability and asserting its geopolitical relevance. The recent spat with Britain calls to mind Iran's seizure of three British patrol boats in mid-June 2004, a time when Iran was struggling with what ... read the whole article
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