Oil sticking to high points, WTI getting comfortable around $71
- Crude sticking to highs as US withdrawal from Iran program continues to boost prices.
- An exected drawdown is US stockpiles could see WTI break higher once more.
Crude oil continues to remain glued to three-year highs and WTI crude prices testing the 72.00/barrel price level as Middle East tensions continue to bolster oil prices.
After the US' decision to withdraw from the Iranian denuclearization deal, oil prices have elevated as traders wait to see how the Middle East will stabilize following the re-imposition of hefty US sanctions on Iran trade. The US is busy attempting to negotiate, or outright threaten, European allies into joining their sanctions on Iran, though most of the remaining accord signers with Iran have already voiced an intent to uphold the agreement. With sanctions being given up to 180-day "grace periods", oil traders have most of what's left of 2018 to fret about the potential negative impacts of restricted trade for Iran.
Oil prices also continue to be bolstered by steadfast production cuts from the OPEC, and even continuous over-production from the US hasn't been able to drive prices lower. Wednesday sees EIA Crude Oil Stocks Change at 14:00 GMT, and markets are expecting a drawdown in US crude supplies of almost 1.5 million barrels.
Crude levels to watch
As FXStreet's own Omkar Godbole noted, crude oil prices are likely headed for a technical break higher as Middle East tension continues to squeeze prices over time: "oil will likely see a bull flag breakout and rise towards major resistance at $74.93-$75.22 over the next couple of weeks. Bulls need to watch out for a potential failure at $71.88. However, only a daily close below $69.56 (April 19 high) would signal short-term bullish invalidation. In a larger scheme of things, acceptance below 200-month MA of $65.37 would signal a long-run bullish invalidation."