Oil Drops As Saudi Supply Fears Ease
Oil Drops on Friday
Oil prices have plunged lower today amidst cooling fears over supply issues in the Middle East. Following the recent outage of the East-West pipeline, Saudi Arabia said overnight that it expects to return around half of the pipeline’s full capacity within days and a return to full capacity within six weeks. The pipeline was recently closed due to rising attacks from Houthi rebels which have been targeting Saudi energy infrastructure. To help alleviate the disruptions caused to supply, Saudi Arabia has been moving some oil cargoes through the Strait of Hormuz via shuttle vessels which load onto tankers once they’re through the Strait.
Bullish Risks Remain
Clearly the market reaction we’re seeing today suggests rising optimism that supply issues are being resolved though the broader risks from the conflict still remain. Indeed, Trump said that he is now considering whether to step up attacks against Iran ahead of a planned meeting with Gulf leaders next week. Trump said this week that the war with Iran could likely be over soon though gave indication under what circumstances an end might be achieved. For now, risks of a continuation in the war and even a fresh escalation mean that oil prices remain subject to upside risks.
Technical Views
Crude
The rally in crude has stalled for now into the 104.26 level with price since reversing back down to test the 95.06 level. This marker is currently holding and while it does so focus remains on a return to upside and a test of 108.73 next. If we break lower here, however, focus turns to 84.60 as next support to watch.
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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.