WTI bulls take control, with Iran and signs of green shoots in trade demand

WTI has continued to advance on the New York session, rallying from the lows of $55.63 to a print fresh highs in the $56.80s. The heightened tensions surrounding Iran are making for higher oil prices on the market. Additionally, news that trade negotiations between the US and China will get back underway next Monday is a positive for the demand side as a reflection of the positive implications for global trade. 

The latest developments following British tanker seizure in the Strait of Hormuz and rising tensions, supporting the bid in the price of oil, Reuters reported today that Britain approached European allies on a safe-shipping mission in the Strait of Hormuz.

Britain styling out a safe-shipping mission in Strait of Hormuz (Oil bullish)

A possible unified effort between European nations such as France, Denmark, Italy and the Netherlands as well as from Germany, Spain, Sweden and Norway for a safe-shipping passage in the Straight of Hormuz is a sign to markets that oil exports out of the region are coming under threat and additional military presence in the region will be a sign of escalating prospects of war.  

However, Britain, France, Germany, Russia and China are set to meet with Iran in Vienna on July 28th to discuss the nuclear deal. As such, oil prices will likely struggle to find much higher ground so long as the apparent de-escalation in Iran catches on again -  Additionally, there are rumours of "hidden" Iranian barrels in China and the IEA recently stating that oil stocks could cover an extended closure of the Strait of Hormuz.

On the flipside, if there is positive traction between Sibo/US trade negotiations, with the negotiating teams confirmed today to meet next week, on Monday, along with seasonally falling inventories and OPEC+ commitments to production cuts, then the upside case is thus supported. 

"Any unwind of storm impacts in this week's EIA data could be a catalyst for substantial short-covering,"

analysts at TD Securities added to the bullish scenario. 

WTI levels

Bulls have their eyes set on the 20-week moving average at 57.78. the bears have eyes on the 200-week moving average down at 52.78. On the downside, on the wide, the 14th Jan 50.41 lows ahead of the 26th November lows, located at 49.44, are keen targets. On the upside, a push through 57.40 and the accumulation of daily 20, 50 and 200 moving averages opens the 20-week moving average. Thereafter, bulls will look to the 60 handle and double top in the 60.80s.