Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Crude Oil Falls Sharply After Iran Attack Spike

By FOREX.com (Fawad Razaqzada)CommoditiesJan 09, 2020 06:18
uk.investing.com/analysis/crude-oil-falls-sharply-after-iran-attack-spike-200436361
Crude Oil Falls Sharply After Iran Attack Spike
By FOREX.com (Fawad Razaqzada)   |  Jan 09, 2020 06:18
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

After spiking again on the back of the Iran’s retaliatory attacks on air bases housing US forces in Iraq, gold and oil prices have now returned to their levels from the day before, while stock index futures have also more than made up their overnight losses. Investors are waiting to hear from US President later on as he reacts to Iran’s attacks. If Donald Trump suggests they will take immediate military action against Iran then oil prices could spike higher again, while a more conciliatory tone could be good news for risk assets and bad for oil. So, crude oil will remain in focus as investors react to any further escalation in the US-Iran spat.

However, with Brent already surpassing $70 – hitting an overnight high of $71.28 – the upside potential is limited from here, in my view. Indeed, prices are likely to ease back sharply as the year wears on, because of a weak fundamental backdrop. In the short-term, the prospects of supply disruptions in the Middle East suggest prices could remain around current levels for a while. But soon or later investors will realise that the plentiful non-OPEC supply will more than make up for any short-term disruptions in the Middle East.

If anything, these higher prices will encourage producers to ramp up output even more in order to make quick short-term profits. This will likely result in more supply than needed, causing prices to fall back – especially if there are no further escalations in the US-Iran situation. And while the OPEC+ group will do its best to keep global supply growth in check, non-OPEC crude supply looks set to increase further – not least in the US, which has become energy independent. This comes at a time of softer global demand growth and as alternative energy supply is on the rise while sales of electric vehicles are booming. The outlook for crude oil is therefore looking more subdued than suggested by current market prices.

But with the ongoing situation in the Middle East, calling the top is very tricky – has it ever been easy? Still, today’s large inverted hammer candle (yet to be completed) and the latest failure to hold above the key $70 hurdle suggests at least a short-term top may be in for Brent. Prices are still holding above some key support levels such as $67.50 but the bulls’ first line of defense around $68.50 has been broken. Together, these are early signs of a possible trend reversal. However, it is early days and if Brent were to go back above $70 and hold there on a closing basis, then the bearish idea would become invalidated.

Brent Daily Chart
Brent Daily Chart

Disclaimer: GAIN Capital UK Limited (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it

Original Post

Crude Oil Falls Sharply After Iran Attack Spike
 

Related Articles

Anastasiia Scavo
Gold Is Looking for a Rally By Anastasiia Scavo - Oct 22, 2021 1

When I was recently looking at the gold prices chart from the perspective of the coming months, I saw minor indications that prices may break through the strong resistance around...

Crude Oil Falls Sharply After Iran Attack Spike

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email