Crude Oil Price Surges on Iran Sanctions, Gulf of Mexico Fears
Crude Oil Price, News Analysis and Charts
- Hurricane Michael weighs on production.
- US sanctions on Iran kick-in on November 4.
The DailyFX Q4 Oil Forecast is available to help traders navigate the market.
Oil Jumps Higher
The price of US crude oil jumped by nearly 1.5% to $84.78/bbl. in early trade on a one-two of nearing Iran sanctions and production shutdowns in the Gulf of Mexico due to Hurricane Michael. Data also pointed to Iran oil reserves being run down ahead of sanctions which is likely to underpin prices in the weeks ahead. Although US sanctions against Iran begin on November 5, the US State Department is reportedly looking at reduction waivers for individual countries – with India cited - to give them more time to replace oil imports from Iran.
Another production headwind helping to boost prices, Hurricane Michael, is expected to hit the Gulf of Mexico region Tuesday, threatening nearly 300 miles of the Gulf coast. Oil operators continue to close ahead of the hurricane with around 20% of oil production affected.
The weekly oil chart shows a significant swing low made back in June 2012 at $$89.04/bbl. the next upside target ahead of the April 2013 swing low at $96.81/bbl. Strong support remains at the 61.8% Fibonacci retracement level at $82.96/bbl.
Oil Price Weekly Chart (April 2012 – October 9, 2018)
The latest IG Retail Sentiment Indicatorshows traders are 42.9% net-long US crude oil – a bullish contrarian sign. However recent shifts in sentiment suggests that prices may reverse lower.
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--- Written by Nick Cawley, Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.