Looking for fear in the oil market? Look no further than the Brent versus West Texas Intermediate oil spread that blew out to the highest level all year and the highest since 2015, with Brent holding a $7.30 per barrel premium currently above WTI. European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip as well as the inability of traditional Brent oil producers to fill that void.
Crude oil prices are hovering just below a three-year high as many are still shocked that oil prices are again trading this high. Oil prices started out strong on Iranian-Israeli war tensions but pulled back after data from Genscape put crude storage at Cushing, Okla., at 39.56 million barrels as of Tuesday, up 479,644 barrels from Friday.
Oil has taken off like a rocket as Israel strikes Iranian targets in Syria in response to rocket fire overnight. Israel says it targeted Iran’s military infrastructure in Syria, in response to an Iranian rocket attack on the occupied Golan Heights.
U.S stocks ended mixed on the news while oil prices fluctuated in each direction, as investors considered the potential negative ramifications of Trump’s decision. The U.S President adopted a very aggressive rhetoric during the announcement and failed to hold back from his view that the 2015 agreement was “defective” at its core.
Crude prices are going nuclear as President Donald Trump pulled out of the Iranian nuclear accord creating a new risk dynamic for global oil markets. The decision by president Trump to pull the plug on what he said was a horrible deal comes as global oil demand is rising and the lack of investment in the oil patch is making it difficult for global oil production to keep pace with demand.
Crude oil prices surged closing at above $70 a barrel for the first time in three-and-a-half years, only to have a nuclear meltdown in aftermarket trading. WTI further set a record 2.7 million contracts of open interest but fell hard after President Donald Trump tweeted that he would announce his decision on the Iran nuclear deal on May 8, 2 p.m. Eastern.
Crude oil prices face a day of reckoning as the United States decides whether it will remain in the Iranian nuclear accord, as well as the realization is that due to underinvestment in oil, it might be difficult to replace Iranian oil if it is taken off the market.
Crude oil prices are walking a tightrope as attempts to break out in either direction this week have failed. More questions and fewer answers. The oil trade is marking time as it waits to see whether the United States will walk away from the Iranian trade deal or if Iran decides to negotiate, which is something they have said they will not do. We saw oil rally hard as the U.S. stock market rebounded from sharply lower levels and reports of a lot of activity and an Iranian nuclear facility.
Crude oil prices fell back yesterday as most oil traders agreed that Iran lied about their nuclear ambitions, but really, they were old lies that we have already heard before. Because there was no real new information, the market then focused mainly on the soaring U.S. dollar and concerns that red-hot global demand may ease as data in Europe was less than overwhelming.
When oil markets are headed towards rebalancing, any shocks due to supply shortage may lead to a huge spike in prices. Brent prices fell on Tuesday to a low of $73.47 per barrel, indicating that $75 may be a short-term top.