- Summary:
- Crude oil prices rose in early Monday trading amid rising tensions between the UK and Iran in the Straits of Hormuz. WTI futures trading at less than $57.
WTI crude (NYMEX futures) ticked upwards in early Monday trading as tensions between the UK and Iran continue to rise, threatening supplies. WTI tested the $57 price level before retreating, as concerns for supply disruptions rise with last week’s incidents in the Strait of Mormuz, a major shipping route for crude oil tankers.
Last week, Iran seized two British oil tankers in the Strait of Hormuz and the UK is now weighing options of responding to the latest act of aggression by Iran. This seizure follows a series of skirmishes between both countries in recent weeks in the Strait.
However, crude oil’s gains have been eroded by a stronger US dollar as well as a resumption of crude oil output from Libya’s Sharara oil field. This is expected to recover the 290,000 barrels lost in output when the oil field was shut some days ago.
The USD gained ground in late Friday trading after the Fed walked back comments made a day earlier by FOMC member John Williams, saying that some of his dovish comments were actually quotations from other sources.
Crude Oil Fundamental Plays
This week’s EIA Crude Oil Inventories report to be released on Wednesday 1430 GMT, as well as updates from the UK-Iran impasse in the Straits of Hormuz will be the main drivers of crude oil prices this week.
Crude Oil Technical Plays
WTI was rejected at the $57 price level (daily R2 pivot) with the formation of a pinbar. Price action is still very thin and this is expected to pick up as the week progresses. It is presently testing the R1 pivot at $56.41. Violation of this intraday support will see WTI target $55.70 and possibly $55.06. If R1 holds as support, a retest of $57.05 and possible $57.76 is likely.Don’t miss a beat! Follow us on Twitter.
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