Crude Higher On Renewed US/Iran Fears
Middle East Fears Boosting Price
Oil prices remain supported into the weekend with crude futures finishing the week firmly higher as fears of a fresh US/Iran escalation take hold. There have been fresh reports that the US and Israeli military are drawing up plans to launch a fresh offensive against Iran after the US midterms in a fortnight’s time. There has been plenty of speculation recently that Trump has been holding off on fresh attacks ahead of the midterms and the prospect of a new wave of violence holds severe upside risks for crude prices, particularly given that they are still holding at elevated levels and haven’t seen any meaningful, or at least sustained, correction recently.
Improving Output Levels
This news flow is offsetting the bearish impact of recent news that oil flows out of the Middle East have recovered to pre-war levels. Indeed, even flows through the Strait of Hormuz have rebounded firmly, despite ongoing attacks on vessels passing through the channel. News of intensified fighting between Saudi Arabia and Houthi militants remain a key threat to watch, however. Over the weekend, Houthis struck a key oil field in Saudi Arabia and have also hit a port in the Red Sea. As such, the threat to supply remains ongoing and while that backdrop remains, oil prices look vulnerable to continued upside near-term.
Technical Views
Crude
The rally in crude has seen price breaking firmly above the 95.06 level, following the rebound higher off the bull channel lows. While that region holds as support focus is on a fresh test of 104.26 and a continuation higher towards 108.73 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.