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.
Iran lied. Big time. Crude oil prices were fading before Israeli Prime Minister Benjamin Netanyahu announced he was going to share “significant development” on the Iranian nuclear deal. That comment turned oil around in its tracks, with a little help from Genscape that showed supply in Cushing, Okla., fell back significantly from the increase they reported last week.
Crude oil prices have been unable to build on the large gains made during Monday’s sessions. Those gains were driven by increased concerns over the potential restriction of Iranian oil exports after Israeli Prime Minister Benjamin Netanyahu accused Tehran of having a secret plan to build nuclear weapons.
Crude oil prices are taking a step back on Monday as an increase in rig counts and a drop-in supply in Cushing, Okla., and a perceived drop in Geo-political risk premium are causing traders to take a step back. The U.S. oil rig count increased by five rigs last week, as U.S. producers are responding to higher prices and demand; but the real reason for weakness in oil may have been the fact that refinery maintenance is slowing the ravenous U. S. appetite for crude oil temporarily.
King Dollar has appreciated against a basket of major currencies ahead of this afternoon’s estimate of first-quarter GDP growth. Seasonal factors are expected to see GDP growth cool in Q1, but this could have little impact on the Dollar’s mojo. With rising U.S. bond yields and expectations of higher U.S. interest rates heavily supporting the dollar, it is likely to hold its own against most majors.
Crude oil prices are staying strong despite a strong dollar and unfolding stories about geopolitical risk. While the risk remains high that President Donald Trump will pull out of the Iranian nuclear accord, talks of peace in the Korean peninsula is shocking the world. A major win for the Trump Administration and for a world that wants peace. Fox Business Network is reporting that North and South Korea on Friday agreed to work on achieving “a nuclear-free Korean Peninsula through complete denuclearization.”