Middle East Tensions Keep Oil Prices Underpinned
Oil Rises Again
Oil prices are continuing to push higher on Thursday with the futures market in the green each day this week so far. The fresh upside comes amidst an escalation in hostilities between the US and Iran which have been caught in fresh tit-for-tat attacks this week following a few weeks of relative calm. Trump sought to calm nerves this week over the renewed attacks signalling that the current strikes would be short lived and are simply intended to reduce Iran’s capabilities of targeting ships in the Strait of Hormuz. However, despite his message it seems traders are less optimistic and, for now, oil prices look vulnerable to continued upside.
Big EIA Drawdown
Crude prices have also been supported this week by a bullish report from the EIA. The group reported an unexpected drawdown in commercial crude stores last week of 4.5 million barrels. This was far deeper than the -0.5 million barrel level the market was looking for and in stark contrast to the prior week’s 0.1 million barrel result. With crude inventories declining further in the US as refiners run down domestic stocks. This was reflected in the crude imports number which was down almost 700k barrels on the week to average 6.8 million barrels per day.
Bullish Risks
Looking ahead, crude prices look likely to remain supported near-term given the ongoing hostilities between the US and Iran. Furthermore, the running down of inventories in the US suggests at some point demand will spill over into a fresh rise in imports further supported crude prices.
Technical Views
Crude
The rally in crude this week has seen prices moving back up to just shy of the July peak around the 95 level. With momentum studies bullish, focus is on a fresh push higher with 95.06 the next structural resistance to note ahead of the higher level at 104.26 where we’ll also see a retest of the broken bull trend line from YTD lows.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.