October 3, 2018

IronFX, WTI Crude Oil Market Outlook - Oil climbs to four year highs yet aims even higher

Oil prices will continue to rise as long as the Iran issue gets closer and intensified.

This article is originally referred from IronFX News.

Oil prices are currently undertaken by a strong bull market that has driven the commodity’s prices much higher than anticipated and could be driven by this energy for some time to follow.

In order to provide our original ideas to our readers we must take a closer look in the most important fundamentals behind the latest price surge.

Many market participants and followers are focused on what will happen when and if the US starts the sanctions against Iran and its Oil exports.

The US, led by its President Donald Trump have undertaken a very aggressive stance towards Iran for various reasons but most importantly is the 2015 nuclear deal which according to the US, Iran has violated.

Let’s not lean towards one side and clarify what Iran means to the Oil market today.

Iran provides Oil to many countries in different continents.

Even though China and India, the largest Oil importers on the planet, have reduced supply from Iran in the previous months, European countries seem to enjoy doing business with Persia.

Since European countries and companies are aiming to continue to do business with Iran in the near future, it could be the case that the Oil trade conditions are favorable towards them and they are not willing to turn elsewhere.

Since Persian Oil comes with discounts and the supplier is considered reliable then the Oil producer provides the most favorable circumstances for Oil importers to do business with them in the proceeding months and 2019.

Even though Iran is facing some domestic issues, with its citizens being under pressure and being accused of creating nuclear weapons, the fact remains that Iran is a stable and consistent Oil provider to the world.

The recent strengthening of Oil prices could be ringing the alarm for the US which has urged for more supply and lower prices.

High Oil prices have the effect of inflicting the US economy as it is seen as the main reason for increasing Inflation in the US.

This was noted very promptly from FED chair president Powell confirming that increasing black gold prices tend to have an inflation reaction in the US.

We support the Idea that US President Donald Trump may be forced to negotiate with Iran , either by keeping the current nuclear deal of 2015 with some guarantees added from Iran’s side , or by enforcing a new deal that will enable the US to have more control but also allow Iran to produce and sell Oil around the globe.

We base our opinion to the fact that, Oil prices are getting out of hand on the upward, while Saudis and Russians are enjoying high prices booking more profits.

OPEC and Russia have mentioned that prices could surge up to $80 per barrel while at the moment the market could be moving towards that price even faster than anticipated.

Again, we see the US moving in a more dominant position on the matter and could change its approach towards Iran, just like it did on the North Korean matter, only to be able to control and influence the Oil market in its favor.

In our humble opinion, Oil prices will continue to rise as long as the Iran issue gets closer and intensified and so a procrastination or stubbornness from the US side could act like a boomerang due to Oil prices moving even higher.

On the same matter from a different perspective, were does China and India turn, in order to cover for glut supply keeping in mind the populations of these countries are growing fast along with Oil demand.

Saudis like prices higher and may not be willing to increase production while Russia may not have the capacity to fill in the gap.

It remains to be seen if one of the pre mentioned countries is willing to discuss ad solve the Iranian matter.

In addition, heading to Christmas the Oil market has the potential to reach higher prices as winter approaches and countries maybe in need for higher supply to counter the cold weather.

1 Hour WTI price chart

The market expects the EIA weekly crude Oil reading to be released today at (14:30) GMT.

A surplus of +1.985 million barrels is forecasted to be released.

It must be noted that the forecasted reading has increased since the previous day figure, hence risks maybe tilted to the upside for the particular indicator.

Crude Oil, has been trading in a sideways manner between our $75.80 (R1) resistance level and our $74.70 (S1) support level, for the past 2 days.

If the forecasts of the Oil news are realized we may see a correction lower for WTI, as the $74.70 (S1) support level could be broken and move lower aiming for the $73.65 (S2) support line.

The fundamental news could however give some strength to the commodity’s price especially any updates from the Middle East.

The Oil market is currently trading at a 4 year high and the highest price reached in 2018.

We would like to emphasize the fact that a bullish sentiment has overtaken the black gold market.

If the bullish trend is to persist, the WTI could move even higher to the $75.80 (R1) resistance level and even breaching it making the way for the commodity to move even higher for the $76.90 (R2) resistance level to be approached.

Original Source: IronFX News

All Forex Brokers

  • 4XC
  • ACY Securities
  • AdroFX
  • AMarkets
  • Axi
  • AximTrade
  • Axiory
  • AZAforex
  • Baxia
  • BDSwiss
  • Deriv
  • easyMarkets
  • eToro
  • Evolve Markets
  • ExclusiveMarkets
  • FBS
  • FinPros
  • ForexChief
  • ForexMart
  • ForexVox
  • Fortrade
  • FP Markets
  • FusionMarkets
  • FXDD
  • FXGiants
  • FXGlory
  • FXGT
  • FXOpen
  • FxPro
  • FXTM
  • HFM
  • HotForex ZA (South Africa)
  • HYCM
  • IC Markets
  • IFC Markets
  • InstaForex
  • Investizo
  • IronFX
  • JustMarkets
  • Land-FX
  • LandPrime
  • Libertex
  • LiteFinance
  • LMFX
  • M4Markets
  • MiltonMarkets
  • MyFX Markets
  • OctaFX
  • Olymp Trade
  • OQtima
  • OX Securities
  • PU Prime
  • PaxForex
  • SimpleFX
  • Spectre AI
  • SquaredFinancial
  • SuperForex
  • ThreeTrader
  • Tickmill
  • TIOmarkets
  • Titan FX
  • TMGM
  • TopFX
  • Traders Trust
  • Tradeview Forex
  • Vantage Markets
  • VT Markets
  • WeTrade FX
  • Windsor Brokers
  • XM
  • XMTrading
  • XS
  • XTB

All Crypto-Currency Exchanges

  • Bibox
  • Binance
  • BingX
  • BitMEX
  • Bitpanda
  • BKEX
  • bybit
  • CoinEx
  • CoinField
  • CoinTR
  • Huobi
  • KuCoin
  • PrimeBit
  • StormGain
  • Wisebitcoin
  • YObit