Oil is nearly 2% up today as traders focus more on growing tensions in the Middle East after Iran took over a British tanker on Friday. While this dictates higher oil prices in the short term, the bigger the market’s over-supply problem will not just go away.
This is something that traders should balance when considering the fundamentals at the moment.
The problem with geopolitical tensions is that they never go on. Therefore, although today’s black gold can get support, as the problem is still a problem, it is hard to imagine a steady price spike while supply continues to exceed demand.
So he thinks that the downturn in profits will be a good game in the second half of the year amid ongoing tensions. For now, the price still remains below key daily creeping averages, but any rise to these levels and potentially over $ 60 a barrel will undoubtedly jump up.
Let us not forget that the unpleasant fears of the global economy will also make oil service if things continue along the path seen in recent months.
Chart: Used with permission from Bloomberg Finance L.P.
Trader Aleksandar Kumanov