Oil prices have already marched to fresh 2019 highs on this development and are likely to stretch higher as this headline adds further to the already tightening supply of Oil in the markets.
It’s difficult to comprehend what direction President Trump really wants Oil prices to go because on one side of the coin, his social media feed is flooded with public calls for prices to drop lower, but on the other side of the same coin, he has given Oil prices another shot in the arm this morning after reports circulated that the United States will soon end waivers granted to countries importing Oil from Iran.
The fundamental themes in favour of higher oil prices are clearly stacking up in their dominoes with OPEC led to supply cuts, geopolitical tensions in Libya and possible sanctions on Venezuela all fueling concerns over further supply disruptions. With the US removing sanction exemptions at a time where oil markets are not only tight but extremely sensitive to price shocks, this news has simply added another domino to a stack that has already sharply piled up to point north.
The truth of the matter remains that what happens with Oil prices has become a game of heads and tails with Trump and the coin has dropped today in favour of more gains in Oil.
While it is likely still far too early and generously optimistic to predict oil trading back towards $100, WTI looks set to attempt a potential target of $70 if concerns over tight supply in the global oil markets remain a major theme persuading more buyers to enter positions.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Lukman Otunuga is a research analyst at FXTM. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in the various factors affecting the currency and commodity markets.
