Summary:
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Oil prices push higher on bullish rhetoric
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OPEC warns on falling Iran supply while Saudi open to higher prices
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Short-term trend has turned higher but price needs to break 80.50 for larger gains
One of the biggest movers today is Oil, with the price of crude jumping strongly higher following comments from both OPEC and Saudi Arabia. The move of around 140 ticks in an hour is even larger than the spike seen on Friday and suggests that traders are eager to buy the market of late. The market has now moved back above the H1 Ichimoku cloud, which could be seen to indicate a change in the short term trend while a recent consolidation has seen a bull flag form.
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Price has carved out a possible bull flag following the earlier sharp move higher and in moving back above the Ichimoku cloud the short-term trend could be seen to have turned higher. Source: xStation
The fundamental reason behind the spike seemed mainly to be comments from Saudi Arabia, with the kingdom reportedly said to prefer Brent back above $80 a barrel. This was the catalyst for the rally but here was earlier positive news from OPEC which may have primed the market, with the cartel warning of threats to future supply from Iran. Unilateral U.S. sanctions on oil sales by Iran, OPEC’s third-biggest supplier, take effect on Nov. 4. Iran’s crude exports are already falling as the U.S. prepares to curb Tehran’s ability to sell oil and participate in global financial markets. The impending sanctions appears to already be having a negative impact on supply as in the first two weeks of September, Iran sold an average of 1.6 million barrels a day, down from 2.5 million barrels a day in April, according to Bloomberg tanker tracking.
Tonight sees the weekly API inventory release at around 21:30 (BST) before tomorrow’s more widely viewed EIA number at 15:30 (BST). The consensus forecast calls for a decline of 2.4M after a drop of 5.3M last time out. Note that 5 of the past 6 weeks have seen drops for the EIA number, including the last 4 in a row!
Keeping the clouds on the chart, from a daily perspective we can see this is also indicative of an uptrend although the Kijun-Sen (blue line) is yet to break above the cloud. However price needs a clean break above 80.50 before it can break the $10 range that has contained price for the last 5 months. Source: xStation
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