Oil: Prices guided by the politics - TDS
TD Securities analysts point out that the Pompeo reaffirmed the US' commitment to sanctions on Iran, following what the market perceived as potential sanctions easing yesterday.
Key Quotes
“Brian Hook, Pompeo's point man on the Iran file, noted that countries that have not breached the previously agreed upon waiver allowances will not be sanctioned. While we suspect that Hook's comments were meant as a signal to key EU countries which have accrued such an allowance, as the Administration officials target the special mechanism created to trade with Iran, the announcement added fuel to the flames and sent crude prices tumbling.”
“With WTI crude prices below the $56.70/bbl mark, CTAs are set to add to their shorts, which should help to widen Brent-WTI as momentum gauges continue to diverge. As we have noted, we suspect that the divergence theme is about to enter into its second act, with a surge in crude pipeline capacity unlocking additional production which will likely keep Brent-WTI widening.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
