Originally published by AxiTrader
Welcome to Crude Oil Today, my brief look at what's happening in oil markets and what it might mean for prices.
As ever, feedback welcome
Oil was higher initially Friday on supply disruption concerns once more as strike action in Norway and trouble in Iraq helped prices firm. But a Bloomberg story that the US was looking to tap the SPR reversed most of those gains. WTI finished at $71.01 while Brent was at $75.33.
Both very indecisive candles on the daily charts.
Now, to answer the question posed in today's title it is worth saying, I strongly believe that if President Trump doesn’t get what he wants with lower oil prices he will tap the SPR in order to seek to drive prices lower.
That’s an especially acute possibility in the run-up to the November mid-term elections in the US. I say that because if there is one thing obvious about the President's attempts to fulfil his campaign promises it is that he genuinely cares about his constituency and anything that negatively impacts them he rails against.
For example, he called Europe a "foe" when it came to trade over the weekend.
Back to oil and I wonder if there is a chance that he gets some sort of agreement from Russian President Vladimir Putin, when they meet in Helsinki, that Russia will indeed pump more oil in order to help drive prices down. Russia oil giants probably wouldn't object and the Saudis will hardly protest given the President often reminds them – and other members of OPEC – the US is prosecuting their arguments for them in the Middle East.
So while the supply concerns are real and while the capacity constraints that traders are now focussed on are also still top of mind the recognition that the President could tap the SPR saw oil give back it's gains on the day in both WTI and Brent terms in what has ended up as a fairly indecisive day's trade.
But I want to focus readers attention on the longer term. And in this regard Brent is the key. It’s been consolidating below the highs for the year for a couple of months now. And that consolidation has now seen – after last week’s big plunge – Brent test back toward the bottom of the Trend channel that reaches back to June 2017 and prices around the $44.80/45.00 region. If we see a move below $72.30, and especially if we see one below $71.25 we’ll know a big fall is in the offing – perhaps toward $66.50.
Have a great day's trading.