- Oil on front foot amid renewed tensions in the Middle East.
- Oil is also boosted by OPEC jawboning.
Crude oil/WTI is now trading around 62.33, in the late European session, up by almost 1.27% and having posted so far made a day high of 62.48, a 2-week high in a holiday-thinned market, as the US is offline on Monday. The main catalyst behind Monday’s price surge may be OPEC jawboning about the prospect of oil market rebalancing and renewed geopolitical tensions in the Middle East.
On Monday, OPEC general secretary said “Oil market rebalancing is gaining massive momentum. Oil output cut measures had 107% conformity in 2017, while January’18 conformity was at 133%. Global oil demand in 2018 is set to grow by 1.6 mbpd due to the encouraging environment. The next technical meeting between OPEC/non-OPEC will take place in June’18”.
Bullish comments about oil market rebalancing and higher compliance level for the production cut agreement have boosted oil prices on Monday.
Oil was also boosted by renewed war rhetoric in the Middle East after Israeli Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East forces closer to direct confrontation.
Thus, despite the concern of higher US productions and elevated levels of Baker Hughes oil rigs count, oil caught a bid on Monday amid OPEC jawboning, encouraging compliances about production cut agreement between OPEC and NON-OPEC coupled with renewed geopolitical concern in the Middle East.
Technically, Oil now has to sustain over 62.55-62.75 area for a further rally towards 63.05 and 63.55-64.85 zone in the coming days; else it may again fall to 61.00-58.00 area again.
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