Oil News: Crude Oil Edges Higher with Oil Demand and Iran Tensions Back in Play

Crude Oil Settles Marginally Higher as Traders Play the Waiting Game on Iran

Crude oil futures eked out a small gain on Friday as traders continued to assess the risks to supply if the U.S. attacks Iran. Right now it’s just a waiting game after President Trump said on Thursday that the U.S. could take action within 10 to 15 days. Friday’s price action suggested a lack of urgency from traders, with a limited range compared to the 6.65% gain since Wednesday.

On Friday, April WTI crude oil futures settled at $66.48, up $0.08 or +0.12%.

$66.27 Emerges as the Key Pivot — Bulls Need to Hold It Going Into Next Week

For most of the session on Friday, the market straddled a multi-month high at $66.27 before recapturing it at the close. This level will continue to be a key pivot over the near-term.

A sustained move over $66.27 will signal the presence of buyers. Overtaking Friday’s high at $67.03 will indicate the buying is getting stronger. This could lead to a test of additional multi-month tops at $68.11 to $69.37. Gains could be capped at these levels because the market is already up over 20% since the December 16 bottom at $54.87. The size of the rally, if there is an attack, will be determined by whether it is created by a combination of both robust short-covering and aggressive speculative buying.

The odds of a rally could begin to fizzle if sellers start to press the market under $66.27. This could trigger a steep break into the uptrending support line at $64.41 on Monday.

Late Short-Covering in Brent Dragged WTI Higher into the Close

According to Reuters, it was a late-session short-covering rally in Brent crude oil that may have dragged the WTI futures contract higher into the close. Before that move, the markets were poised to finish lower for the day, suggesting traders believe President Trump’s 10-to-15-day waiting period. In the meantime, the stalemate between the two countries over nuclear weapon development continues as Trump leans on the Islamic Republic to come to terms or face an attack. Earlier in the week, Trump said that “bad things” would happen to Iran before announcing his deadline.

Falling U.S. Inventories Provide Support, but the Supply Glut Remains the Ceiling

Oil prices were also supported this week by reports of falling crude inventories and weak exports in the world’s biggest oil-producing and exporting nations. Meanwhile, the U.S. Energy Information Administration (EIA) reported a drop of 9 million barrels in U.S. stockpiles.

Nonetheless, traders can’t keep their minds off the fact that there are ample supplies and the glut could grow with OPEC+ leaning toward the resumption of oil output increases from April. Additionally, analysts at J.P. Morgan project sizeable surpluses this year, according to Reuters.

More Information in our Economic Calendar.