Oil Price Fundamental Daily Forecast – Prices Rise on Tanker Attack, but Need Positive Trade News to Continue RallyCrude oil is also being underpinned by optimism over U.S.-China trade relations. President Donald Trump said he’s meeting with Chinese Vice Premier Liu He on Friday, fueling optimism about a positive outcome from this week’s high-level trade talks.
An escalation of tensions in the Middle East after Iranian state media said that two rockets had struck an Iranian tanker traveling through the Red Sea, are helping to drive U.S. West Texas Intermediate and international-benchmark Brent crude oil futures sharply higher on Friday. The markets are also being underpinned by positive developments over U.S.-China trade relations and Brexit.
Rockets Strike Iranian Tanker
The National Iranian Oil Company told NBC that the tanker was hit by two explosions at 5:00 a.m. and 5:20 a.m. local time. It said the tanker had been traveling through the Red Sea off the coast of Saudi Arabia, 60 miles from the city of Jeddah.
“According to Public Relations and International Affairs Department of National Iranian Oil Company, the oil tanker named Sabity belonging to the company sustained damages to the body when it was hit by missiles 60 miles from the Saudi port city of Jeddah,” the IRNA said on its website. CNBC was not able to independently verify the reports.
“The cause of the incident is currently under investigation by the experts.”
Hopes for Deeper OPEC Output Cuts
Earlier in the session, oil prices were boosted after OPEC hinted at making deeper cuts in supply.
On Thursday, Mohammad Barkindo, Secretary-General of OPEC, said all options were on the table, including a deeper supply cut to balance oil markets. A decision would be taken at a December meeting between OPEC and its partners, he said.
U.S.-China Trade Deal Optimism
Crude oil is also being underpinned by optimism over U.S.-China trade relations. President Donald Trump said he’s meeting with Chinese Vice Premier Liu He on Friday, fueling optimism about a positive outcome from this week’s high-level trade talks.
Prices are likely to remain underpinned by the escalation of tensions in the Middle East and the possibility of further production cuts by OPEC early next year.
A positive outcome from the meeting between President Trump and Chinese Vice Premier Liu He should drive prices sharply higher.
However, if Chinese officials leave Washington without even a partial trade deal then crude oil prices could weaken into the close.