Crude Jumps to 8½-Month High After U.S. Strike on Iran General

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Updated: Jan 7, 2020, 13:21 UTC

Crude oil has soared, gaining 4.3% since a U.S. airstrike killed one of Iran's top generals. With tensions high in the Middle East, nervous investors could send crude to higher ground.

https://www.youtube.com/watch?v=l_LTtWOnH0M

Crude has gained more ground in Monday trade. Currently, West Texas Intermediate futures are trading at $63.87, up $0.83 or 1.3%. Brent crude oil futures are trading at $69.62, up $1.02 or 1.49%.

U.S. Strike Sends Crude Close to $65

Crude prices have been on a tear since Friday, when a U.S. airstrike on Baghdad killed a top Iranian general. Qassem Soleimani was the head of the Revolutionary Guards, and his death has sent tensions in the Middle East to a fever pitch. Iran has vowed to retaliate for the killing, which in turn has led President Trump to threaten to hit dozens of Iranian targets. On Friday, crude jumped 3.0%, its highest one-day gain since the first week in December. The rally has continued on Monday, as crude touched a high of $64.75, its highest level since mid-April. An escalation in the conflict could send oil prices even higher. At the same time, traders should keep in mind that oil prices subsided after the huge September spike and these gains were erased just two weeks later.

Fed Expected to Stay on Sidelines

In the U.S., the holiday schedule resulted in the release of the FOMC minutes on Friday. Policymakers said they expected rates to remain steady “for a time”, but did note continuing downside risks to the U.S. economy due to global trade tensions. ISM Manufacturing PMI slipped to 47.2 in December, down from 48.1 a month earlier. This was shy of the estimate of 49.0 and the weakest reading since June 2009.

Technical Analysis

Crude continues to move higher and break above resistance lines. On Friday, crude punched above resistance at 63.25. Above, there is weak resistance at 64.20. On the downside, 63.25 has switched to support, followed by support at 62.25.

WTI/USD 1-Day Chart

About the Author

Kenny Fisherauthor

Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.