Oil advances as investors fear an impending supply cut
Oil markets posted another strong day of gains as United States President Donald Trump threatened Iran with an extension of the current round of economic sanctions already in place. Brent and WTI oil had already received a boost over the announcement of supply cuts from OPEC and the ongoing power blackouts in the oil-rich nation of Venezuela.
Iran has suffered massively from the current round of economic sanctions being imposed by the Trump administrations, with its oil exports declining by around fifty per cent; latest reports suggest that President Trump will make his decision next month on whether to extend waivers on whether certain nations can or can not buy oil from Iran.
The recent production cuts from OPEC nations, led by Saudi Arabia, have seen Brent Oil prices edging advancing to four-month peaks, while WTI oil is fast approaching $65.00. Oil production from the Kingdom of Saudi Arabia has slumped to its lowest level in four years, as the world’s largest oil producer seeks to drive the price of oil higher to fund economic changes going on in its domestic economy.
Oil prices have also been pressured by other leading OPEC nations failing to meet their oil production targets, while non-OPEC member Russia, has also failed to achieved production targets. Oil inventory data from the United States this week is also expected to show a major fall in production.
At present is it difficult to see what could halt the recent advance in oil price, bullish PMI manufacturing data from the Chinese and U.S economies this week and growing optimism of a trade deal between the worlds to largest economies is also driving oil markets higher.
Daily LCrudeMay19 Candlestick Chart | ActivTrader
Crude oil now trades above its 200-day moving average and is trading at its highest level since November of last year. The daily price chart shows price approaching the 61.8 Fibonacci retracement level, this is likely to be a major test for oil bulls prior to the $70 benchmark. Key support on any moves lower is now found at the $60.00 and $58.50 levels.
Written by Nathan Batchelor, External Analyst
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