Oil Price Fundamental Daily Forecast – Iran Sanctions, Trade War Fears Balancing Supply/Demand

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower early Monday as mixed fundamentals continue to drive the battle between the bulls and the bears. Technical factors are also influencing the price action, which suggest a balanced market.

At 0749 GMT, October WTI crude oil is trading $68.57, down $0.15 or -0.22% and November Brent crude oil is at $75.79, down $0.03 or -0.04%.

In the absence of fresh news over the week-end, investors are relying on familiar fundamentals to drive the price action on Monday. Bullish traders are citing looming U.S. sanctions against Iran’s oil sector as supportive. Bearish traders believe that slowing global economic growth will curtail demand and keep a lid on any rallies.

As far as Iran is concerned, OPEC member Iran has exported around 2.5 million barrels per day (bpd) of crude oil so far this year. When the sanctions kick in on November 1, most analysts expect exports to fall by at least 1 million bpd. This is what bullish investors are pricing into the market at this time.

Bearish traders are counting on a prolonged U.S.-China trade war to dampen global growth and weigh on demand. Furthermore, last week’s rig count suggests the U.S. may be curtailing production. According to Baker Hughes, U.S. energy companies cut nine oil drilling rigs last week, dropping the total to 860. This was the largest reduction since May 2016.

Forecast

If fresh news isn’t introduced to the market today, prices are likely to drift near key technical retracement areas on the daily charts. This suggests a balanced market.

For WTI traders the balance area is $68.46 to $67.59. Brent traders may hold prices inside $75.29 to $76.22.

The wildcards today are a looming strike in the North Sea, which could disrupt supply and the U.S. Dollar. A weaker dollar could drive up demand, while a stronger dollar will make U.S. oil less-attractive to foreign buyers.