On Monday, Oil prices opened approximately at the same levels were it left off last week trading around $62 per barrel. The black gold rallied last week despite the fact that oversupply has flooded the market as a result of the increased Shale Oil production in the United States. Comments from Mohamad Barkindo OPEC’s secretary general at the beginning of the month may have foreseen the current rally of Oil prices. He stated that supply is keeping up, but demand is more robust and that is surely what seems to be happening now.
On Tuesday, crude oil pushed even higher breaking the $62.30 per barrel resistance hurdle which has now turned to support.
IRAN VS SAUDI ARABIA
Oil prices jumped on new tensions between Iran and Saudi Arabia as the commodity is very sensitive to geopolitical news.
Not a very long time ago, Iran blamed fellow Middle East country Saudi Arabia for riots breaking out in their territory after people turned against the Iranian government.
The issue between the two major Oil producing countries is also a display of power and dominance in the Middle East. The two countries have been in a competition between them for a long time now, as to who is the most influential related to neighbor countries like Iraq and Kuwait.
This week, statements coming from Saudi Arabia’s side named Iran 2015 nuclear deal a fault arrangement. Investors and traders will be very interested in the Saudis crown prince and U.S. President Donald Trump meeting this week. It is possible that both sides will speak down on Iran which is considered the black sheep of the situation.
As long as Iran nuclear tensions are not leaving the picture, it is possible that U.S. oil sanctions should keep the oil bulls charging for the near future.
Fears about decreasing crude production in Venezuela have also served to upkeep oil prices. The country’s February output dropped by more than half a million barrels contrasted with the previous year, according to International Energy Agency data last week.
The declines are due to the economic crisis in the country. Yet, the shortage in current Venezuelan production is covered by the record U.S. output. U.S. inventories are expected to rise again this week albeit at a slower pace.
Crude Oil is currently trading around $63 per barrel.
For Tuesday, we see the case for the commodity to continue to trade in a bullish manner and may even break the $63.50 (R1) resistance line. Despite possible corrections within the week, we could see the commodities prices land on higher grounds than currently as fundamental issues stated above are not expected to be resolved anytime soon.
The Crude Oil Inventory data to be released on Wednesday 16:30 (GMT +2) supports the case that Oil may move in a sideways movement with some bearish tones. This is due to the fact that a surplus is expected of 3M barrels according to EIKON Reuters. If the forecast is to be realised then we could see Oil prices dropping toward the $62.30 (S1) support level and even breaching it heading to the $61.50 (S2) support hurdle.
However, should the bulls have the upper hand we may see the commodity breaking the $63.50 (R1) resistance level and aiming for the $64.55 (R2) resistance hurdle. This case may also be supported by any news regarding further tensions in the Middle East.
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