US Storms Impacting Crude
.png)
Crude Capped for Now
Crude prices remain weak through early European trading on Tuesday. The market was pushing higher initially yesterday, benefiting from a weaker USD before reversing from the session highs. Over-supply concerns remain a key threat to the market with concerns rising as Kazakhstan prepares to resume production at the Tengiz site. Additionally, news that Chevron is bring more Venezuelan crude to market is also weighing on price this week.
US Snowstorms – production Impact
Despite these developments however, downside is being tempered this week by extreme weather conditions in the US which are seeing increased demand for heating fuels and also impacting production output. Severe snow and ice storms in parts of the US has seen around 2 million barrels per day of output lost this week, around 15% of national output. Refineries in the Gulf Coast have also been impacted by the weather and analysts are now projecting heavy inventory drawdowns in coming weeks which should underpin prices.
Geopolitical Risks
Looking ahead, there are further upside risks for crude from the geopolitical front. News that the US has move an aircraft carrier and additional warships to the Middle East is stoking fears of a potential strike against Iran. The prospect of any renewed US conflict in the region poses severe supply disruption risks and crude is vulnerable to a sharp move higher in response to any headlines reflecting rising tensions or the start of any military actions.
Technical Views
Crude
For now, crude prices remain hammed in against the 61.39-level resistance. With the bullish channel break still intact, focus is on an eventual break higher and a test of 64.41 next, while support at 57.57 holds.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 73% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.