Crude Falls Back As Trump Holds Off On Iran Strike
US/Iran Tensions Cool
Following a five-day run higher, crude priced have come under selling pressure today with the futures market reversing sharply on news that Iran is backing down in the face of US military action threatened by Trump. Trump signalled yesterday that the US army would hold off from launching a strike on Iran after Tehran offered assurances that violence against protesters would stop. This news comes on the back of several days of intensifying rhetoric from both sides leading to fears of an imminent US military strike. Oil prices had been rallying accordingly given the threat of heavy supply disruption from a conflict between the US and Iran. With the near-term risk of conflict seen lower today, crude prices have fallen back and could push down further if tensions continue to subside. The caveat to this is that any fresh violence in Iran will likely see crude prices spiking sharply higher as the risk of US military action returns.
Huge EIA Inventories Surplus
Along with news of easing US/Iran tensions, crude prices are also being weighed on by the latest EIA data yesterday. The group reported a huge 3.4-million-barrel surplus in commercial stores, in stark contrast to the prior week’s -3.8-million-barrel reading and the expected -1.7-million-barrel reading the market was looking for, underscoring concerns over a growing supply glut. Marking the largest inventories excess in months, the data adds further resistance for crude near-term and should help keep prices skewed lower for now provided the US/Iran story remains calm.
Technical Views
Crude
The rally has stalled for now with price reversing back under the 61.39 level. While above the broken bear channel highs, however, focus remains on a continuation higher with 64.42 the next bull target. Only a move sub 57.57 will negate this bull view putting 55.07 in view as the next objective instead.
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