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Oil Remains Bid Following OPEC Meeting as US Shuns Iran Exports

Oil Remains Bid Following OPEC Meeting as US Shuns Iran Exports

David Song,
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Oil Talking Points

Oil prices have spiked higher as senior officials at the U.S. State Department encourage ally countries to shun energy imports from Iran, and crude stands at risk of extending the advance from the previous week as it carves a fresh series of higher highs.

Image of daily change for major financial markets

Oil Remains Bid Following OPEC Meeting as US Shuns Iran Exports

Image of daily change for oil prices

Even though the Organization of the Petroleum Exporting Countries (OPEC) plans to boost production following its 174th meeting, the renewed sanctions on Iran is likely to hit global supply as the Trump administration wants all countries to wind down oil imports from the region by November 4.

Moreover, the unexpected shutdown at Syncrude Canada may keep crude afloat as the major producer is expected to be offline until the end of July, and growing uncertainties surrounding the world economy may fuel higher energy prices as lawmakers in Canada prepare to update their trade policies.

Image of US field production of crude oil

The developments should keep oil bid as it curbs the outlook for global supply, and it seems as though OPEC and its allies will take a gradual approach in restoring production as the group combats the ongoing rise in U.S. outputs. Keep in mind, U.S. field production of crude continues to hit record highs, with output climbing to 10,900K b/d in the week ending, but recent price action raises the risk for higher energy prices as oil breaks out of a narrow range.

Oil Daily Chart

Image of oil daily chart
  • The near-term breakout in oil prices keeps the topside targets on the radar, with a close above $70.40 (78.6% expansion) raising the risk for a move towards $71.30 (38.2% expansion).
  • Next region of interest comes in around $72.70 (50% expansion) to $72.80 (100% expansion), which lines up with the 2018-high ($72.88), with the next area of interest coming in around $74.00 (61.8% expansion).

For more in-depth analysis, check out the Q2 Forecast for Oil

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--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.