Crude Bounces Back

Crude futures are pushing higher again today with sentiment quickly reversing in the wake of Trump waiving sanctions on Russia. Oil prices had softened yesterday, initially, in response to news of Trump’s diesel export agreement with Russia, which includes the waiving of some economic and trade sanctions. Trump explained that the move was intended to help coax Russia into negotiating with Ukraine in a bid to bring about peace between the two countries. As part of the deal Trump has agreed to allow for the sale of sanctioned oil tankers to allow them to move oil legally. Despite this news, it seems that focus is reverting back to tensions in the Middle East as shipping attacks in the Strait of Hormuz continue and Saudi Arabia and Houthi militants also continued to exchange attacks. Additionally, we’ve seen further attacks on energy infrastructure between Russia and Ukraine despite Trump’s peace efforts.

Geopolitical Tensions

For now, crude prices look likely to continue their grind higher given the volatile backdrop in the Middle East. Ultimately, it will take a good news shock to help drive prices lower near-term, either on the US/Iran front or the Russia/Ukraine front.  If we hear news of the US and Iran recommitting to peace talks, for example, this should help drive a long covering correction in crude. However, any news of fresh attacks or escalating tensions in the Strait of Hormuz should see oil prices jump once again.

Technical Views

Crude

The rally in crude has seen price breaking above the 95.06 level following the rebound off the bull channel lows. With momentum studies bullish, focus is on a continuation higher back up to 104.26 initially and 108.73 above. If we break lower, however, 84.60 is first support to watch.