Middle Eastern Tensions and Dovish Fed Lifts Oil 3
Today’s gains have put oil up over 5% so far this week and 3.8% up on the month to date. Following May’s decline of 16% could oil have further to climb?
Reports of a US military drone being shot down by Iranian missile in international air space over the Strait of Hormuz demonstrates the elevated level of tensions around that key oil route. This comes following suspected Iranian attacks on two tankers earlier in the month amid ongoing US sanctions on Iran.
Whilst tensions in the middle east have caused the spike in oil prices today and earlier in the month, there are several other factors supporting oil.
US -Sino Trade & the Fed
Signs that the US and China, the two largest consumers of oil, are resuming talks lowers the probability of a prolonged trade war hitting demand. Meanwhile the Fed preparing to offer stimulus to the US economy has not only weakened the dollar making oil cheaper for holders of other currencies but would greatly help the demand side of the oil equation too.
OPEC Meeting
After weeks of wrangling, OPEC have finally agreed on a date to meet; 1st July with OPEC plus group meeting July 2nd. Saudi Arabia have bee making it clear that they are keen to keep the output production cuts of 1.2 million barrels a day in place, possibly even limiting production further. Momentum for an agreement seems to be building amid growing reports from energy ministers that an extension is “logical and reasonable”.
Stockpile data
US Crude stocks declined by more than expected last week, a draw of 3.3 million barrels, well below the 1.1 million expected after stockpiles had swelled to almost 2 year highs.
For now, oil traders will remain glued to developments in the middle east for signs off further escalation of tensions. US macro data will also be closely watched for its impact on the dollar.
Crude oil levels to watch:
Crude has broken out of the channel which has been trading in this month. Crude bulls will be eyeing resistance at $56.20 prior to $57.15 on its way to $59.00. On the downside, resistance turned support $54.85 offers near term support. A break below this level would see oil re-enter its familiar channel. The next support level is seen at $53.30.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024