Oil Falls On Rising Global Supply Levels
Improving Output Levels
Oil prices remain soft at the start of the week as the focus stays on recovering output flows from the Middle East. In recent weeks, rising global supply has taken the focus off geopolitical tensions in the region with output there seen back at pre-war levels last month. The return of the East-West pipeline in Saudi Arabia as well as rising distribution levels in the Strait of Hormuz means that output has been able to recover, helping bring oil prices back down from the highs levels seen at the start of September.
US/Iran
While there has been no progress between the US and Iran, there has been no escalation in the conflict which has created a quieter backdrop recently. While this remains the case, oil prices should continue to drift lower. However, there are fears that Trump will step up the war again once the November midterms are out of the way.
Co-ordinated G7 Release
On Sunday, OPEC+ members agreed to keep output quotas unchanged for the month ahead. This follows on from Friday’s news that G7 countries will release 100 million barrels of crude and diesel from their emergency reserves in a bid to help reduce energy costs. Additionally, those countries have also agreed not to apply any restrictions on energy imports.
Technical Views
Crude
The sell off in crude has seen price breaking back down below the 95.06 level. With the bull channel lows holding as support for now, focus is on a continuation higher. However, bulls need to see price quickly back above 95.06 or risk a break of the channel and a test of deeper support at 84.60
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.