Yahoo Finance Oil Price Fundamental Daily Forecast – Middle East Tension Could Spike Prices Higher if It Impacts Supply
U.S. West Texas and international-benchmark Brent crude oil is trading at its highest level in two weeks early Monday. The catalyst is a solid recovery in Asian equity markets and tension in the Middle East.
At 0710 GMT, April WTI crude oil is trading $62.07, up $0.52 or +0.84% and April Brent crude is at $65.16, up $0.32 or +0.49%.
Asian shares are trading higher, helping to underpin the crude oil market. Thin trading conditions due to market holidays in the United States as well as Greater China and India are also encouraging some light buying.
Additionally, Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East foes closer to direct confrontation.
Another factor helping to boost prices is the technical momentum created by last week’s rally.
Helping to limit gains are general concerns over rising U.S. production that may be offsetting the OPEC-led group’s attempts to limit production, reduce the global supply glut and stabilize prices.
Traders are also paying close attention to another increase in the U.S. oil rig count. According to Baker Hughes, the number of rigs rose by seven to 798, its highest level since 2015. This marked the first time since June that drillers added rigs for four consecutive weeks.
In other news, money managers slashed their bullish bets on ICE Brent crude oil futures by the most in nearly eight months in the week to February 13, data showed, as prices plunged amid concerns of oversupply.
Speculators also cut net long U.S. crude futures and options positions in the week to February 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.
Forecast
The upside momentum from last week’s rally could continue today if investors decide to latch onto the story about Middle East tensions. This story should be enough to underpin prices. I don’t think we’re going to see a spike to the upside unless there is a direct effect on supply.
Selling pressure could resume if hedge fund investors decide to continue liquidating their previously created long positions.
This article was originally posted on FX Empire
