Crude oil prices are still reeling from the threat that OPEC and Russia may raise output and fear that turmoil in Italy could cause larger problems in the Eurozone. This comes as sub-tropical Storm Alberto poured a lot of rain in Florida denting some gasoline demand. While it looks like the first hurdle of getting gasoline supplied by Memorial Day has cleared, the oil market will still be undersupplied even if OPEC and Russia add the amount of oil that they say they will.
Crude oil prices are under pressures as the Organization of the Petroleum Exporting Countries (OPEC) and NON-OPEC start laying the groundwork for a production increase and traders take profits ahead of the long holiday weekend.
It’s been a relatively positive start to trading in Europe on Wednesday, with much of the attention falling on President Donald Trump’s decision to withdraw from the Iran nuclear deal. Crude oil is back trading at three-and-a-half year highs this morning after Trump confirmed that the United States will be withdrawing from the Iran nuclear deal and sanctions will be restored.
Crude oil prices face a day of reckoning as the United States decides whether it will remain in the Iranian nuclear accord, as well as the realization is that due to underinvestment in oil, it might be difficult to replace Iranian oil if it is taken off the market.
Crude oil prices are walking a tightrope as attempts to break out in either direction this week have failed. More questions and fewer answers. The oil trade is marking time as it waits to see whether the United States will walk away from the Iranian trade deal or if Iran decides to negotiate, which is something they have said they will not do. We saw oil rally hard as the U.S. stock market rebounded from sharply lower levels and reports of a lot of activity and an Iranian nuclear facility.
Iran lied. Big time. Crude oil prices were fading before Israeli Prime Minister Benjamin Netanyahu announced he was going to share “significant development” on the Iranian nuclear deal. That comment turned oil around in its tracks, with a little help from Genscape that showed supply in Cushing, Okla., fell back significantly from the increase they reported last week.
Making collusion great again. The OPEC says that its recent move to cut oil production had nothing to do with greed, but they acted with a “noble goal” of rescuing the global oil market. These comments came from the UAE energy minister Suhail Al Mazrouei, who said it’s not about raising prices it is about the noble endeavor of working to reduce oversupply. Well, in a way he does have a point.
The breakout above major four-star resistance continues, but so does the lack of participation; volume this week has been at the lowest of the year. However, yesterday’s rally was fairly broad being led by tech. Despite good earnings, the banks are fighting to hold ground and have underperformed greatly given the landscape.