During two days of trading this week, crude oil products, and natural gas fell on profit taking before the New Year’s holiday.  New York oil closed Tuesday at $98 and London at $110, leaving NY oil futures up by 7.2 percent for 2013 while London’s Brent fell 0.3 percent during the past year. The difference in the two markets was largely due to improved transportation by rail and pipeline to US Gulf Coast refineries during the year which allowed increased flows of oil to reach the Gulf Coast where it was turned into products that are being exported. Disruption in supplies from Iran, Libya, and South Sudan during the year was roughly offset by increased US tight oil production which left Brent largely unchanged for the year.  Natural gas futures declined sharply this week on profit taking, leaving the current contract at $4.23 per million on Wednesday down more than 25 cents from the highs of above $4.50 touched last week.
The nuclear negotiations with Iran have resumed with some progress being reported. However, the Iranian negotiating team was joined by unidentified hardline, anti-agreement conservatives. This suggests that the resumption of Iranian oil exports may not be as much of a sure thing as many prognosticators are expecting. Although most believe a peaceful solution to the Iranian confrontation would be a good thing, some, including the Israelis, Iranian hard-liners, and even members of the US Congress, are making unrealistic demands that will never be part of a settlement.
Fighting between Sunni militants and government forces in Iraq began on Monday after government SWAT teams attempted to end the Sunni’s the year-long sit-down protest in Anbar province by breaking up the Sunni camps. The Maliki government is sending more troops into the province and as the week draws on fighting seems to be increasing. Iraq is starting to look more like a civil war all the time which clearly will not be good for oil exports.
The military government in Egypt is talking about moving ahead presidential elections to April in an effort to get army chief al-Sisi elected head of state as soon as possible. In the meantime, the government is moving ahead with plans to start a third trial of ousted President Morsi for organizing a jail break back in the Mubarak days. The government is now trying Morsi on a variety of charges most of which carry the death penalty. The execution of Morsi would likely lead to increased turmoil.
The Saudis have pledged $3 Billion to build up Lebanon’s army so it can at least act as something of a counterweight to Iranian-backed Hezbollah.  France will supply the weapons.
China’s manufacturing growth is slowing as demand for exports weakens. Beijing is working on ways to deal with the $3 trillion in debt it has accumulated by building so much fancy infrastructure in the last 30 years.