WTI Outlook | Crude Oil trades around $70 per barrel with potential moving even higher.
This article is originally referred from IronFX News.
Oil prices have climbed to their highest levels in 3 ½ years in the current weeks trading sessions and prices seem to stabilize around that price possibly awaiting on fundamental developments to show the road for the fresh peak.
Today, the commodity traders and analysts are anticipating the announcement by President Donald Trump on whether the United States will re impose sanctions on Iran.
Should Trump decide to remove the United States from the multi-nation agreement on Iran’s nuclear programme, Iranian crude exports could be afflicted, assisting to the oil market tightness, which is reviving into balance after years of oversupply.
Whatever the case, if the US decides to leave the agreement the market sentiment is that Oil prices could jump even higher.
The Iranian side replied with the deputy head of the National Iranian Oil Company stating that Iranian Oil development cannot be stopped even if new sanctions are imposed.
In our opinion, Iran’s Oil industry will be hurt if sanctions are implied and also global supply will be affected significantly.
According to OPEC, crude oil exports were lifted to 24.5 million bpd, increased by 230,000 bpd in April compared to previous month.
It must be noted that, gains for the group resulted from higher exports coming from the Middle East, which counterbalanced shortfalls in Africa and Latin America.
Speaking of the devil, Iran set the pace in elevating exports by a surprising 22% in April compared to March.
Kuwait also covered demand by recording a 14% increase month on month.
For successive months it has been the case that oil supply rises as the need globally for black gold is increasing along with higher economic growth.
Demand is evidently stronger despite the oversupply especially coming from the US shale producer’s side.
On another front, this week the Saudi Arabian Energy Minister said that the mega oil producer is not aiming an exact price for oil and that their purpose all along has been stability, rebalancing and equilibrium for the oil markets.
According to the Baker Hughes weekly US Oil rig count, Oil rigs have increased from 825 to 834 accounting for 9 new oil rigs introduced.
While oil prices are rising, serious cash inflows for the producers are being recorder.
On a separate note, in a report released in April, the IEA, warned that the trade dispute between the U.S. and China could hurt oil demand.
Furthermore, as the summertime is slowly kicking in, EIA estimates U.S. regular gasoline retail prices to average $2.74/gallon up from an average of $2.41/gal since last year.
The higher forecast gasoline prices are mainly the result of higher forecast crude oil prices.
As a conclusion, currently the most important factor affecting Oil prices is how the Iran deal situation will be played out as the market seems to be somewhat immune to financial data released.
(Crude Oil Inventories) Iran’s part of oil supply to the world is significant and this is a fact that could escalate to further problems if the US decides to leave the agreement.
Iran’s retaliation could be highly probable and so Oil prices could be inflated to artificial levels entering the Summer time.
Technical Analysis on Crude Oil
Current Price: $69.50
Crude oil has been in a positive sentiment since Friday after the fundamental news on possible US removal from the Iranian deal supported the commodity’s price.
The positive sentiment continued on Monday signalling that a bullish appetite from traders could be in view.
Today, US president Donald Trump is to decide on the Iran agreement and will make the decision available for the public.
The decision is widely anticipated and most possibly will move the Oil market.
If this decision is not to imply new sanctions, oil prices could fall on a minor level heading towards the $69.00 (S1) Support barrier or even lower.
If the US is to imply sanctions on Iran, Oil prices could break the $70.50 (R1) resistance line and lift them to reach the $71.50 (R2) Resistance hurdle and even breaching it.
In addition, at the moment the RSI Indicator seems to remain around 50 which gives an uncertain sentiment, however with the fundamental news of the day, it is our opinion that the sentiment is rather bullish.
Original Source: IronFX News