Yemen and the big oil price move this week.

Saudi Arabia is “reportedly” putting “boots on the ground” in Yemen, and these reports have triggered a big rise in Oil Prices. I use quotes around “reported” because, as of this writing, there has been no official or otherwise authoritative confirmation of new, significant troop moves into Yemen. Whether coincidental or otherwise, these reports triggered market-order covering trades in heavily oversold and shorted oil futures markets. Oil prices which had traded below $38 bbl earlier this week, by mid-day Friday had risen to over $45 bbl WTI. West Texas Intermediate is the major U.S. Market for crude oil, and contracts are for 1000 bbl (equivalent to 42,000 gallons). $45 is the price per bbl of crude oil for these contracts. Oil contracts are highly leveraged and so moves like this one no doubt would force some margin calls, hence the market orders to buy, exacerbating the price jump. Cynics will note that Saudi Arabia, as the world’s largest oil producer, has been suffering from the low world’s oil prices, and the short-term timing couldn’t be better going into the final week before the Labor Day long weekend, when petrol demand is very high.