Oil Down on Monday
Oil prices are on watch this week as traders await Iranian retaliation following a US air-strikes on key nuclear facilities over the weekend. Crude prices have fallen from initial highs given there has been no immediate response from Iran and no follow-up strikes from the US.
Strait of Hormuz Key to Watch
There has been chatter of Iran potentially blocking the Strait of Hormuz, a key shipping channel through which around 20% of global oil/gas supply is delivered. If seen, this would have huge upside impact on oil prices with crude futures likely to spike higher to multi-year highs. Such a move would have major global repercussions and so is not a straight-forward or guaranteed response from Iran. The impact on the US economy would be more limited than on many other countries that rely heavily on oil imports (US is a net-exporter). Indeed, higher oil prices actually improve the US’ terms of trade though the inflationary impact would have a considerable effect on households and consumers.
This Week
Looking ahead this week, traders will be monitoring incoming news flow, specifically waiting on a response from Iran. If there is military escalation in the region (increased attacks on Israel or attacks on US bases), this is likely to drive oil prices back up higher with fresh focus on distribution impact. If there is now retaliation from Iran this week, oil prices have room to drift lower for now.
Technical Views
Crude
The rally in crude has failed on a second attempt at breaking above the bear channel highs and the 77.69 level resistance. Price remains above 72.61 for now and while this level holds, focus is on an eventual break higher with the 80.66 level the higher target to note. To the downside, 67.45 will be the 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.