Middle East in Focus
Oil prices are pushing higher again today in response to news that the US is preparing to strike Iran. Trump has reportedly approved a strike plan following Iran’s refusal to surrender and its continued attacks against Israel but has not yet made the final decision to launch an attack. However, speculation is growing that if Iran doesn’t surrender or cease attacks on Israel, a strike could come as soon as this weekend.
Supply Risks for Crude
The prospect of such an escalation poses heavy supply risks given the amount of energy infrastructure in the region. Additionally, the risk of disruption in the Strait of Hormuz, a crucial shipping channel for oil distribution, means that oil prices are highly vulnerable to fresh upside if the US does press ahead and attack Iran.
Huge EIA Inventories Draw
Oil prices are also being boosted today by a deeper-than-forecast drawdown in US crude inventories, as reported by the EIA yesterday. Commercial crude stores were seen dropping by 11.5 million barrels, a stark drop from the prior week’s 3.6-million-barrel decline and well below the -2.3 million-barrel reading the market was looking for. This marks the sharpest decline in crude stores in over a year and sees overall inventory levels down around 10% below their seasonal average.
Technical Views
Crude
For now, crude prices remain above the 72.61 level and with momentum studies bullish focus is on a fresh push higher. The bear trend line and 77.69 level remains the key resistance region to note with bulls looking for a break higher towards 80.66 next. To the downside, 67.45 is the key support to note.
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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.