WTI oil extends pullback from Monday’s 3 ½ year high ($119.44) on Tuesday, following unexpected and sharp change in the sentiment after President Trump said that war in the Middle East could end soon.
He also signaled that the US may lift some sanctions on sales of Russian oil, to partially compensate negative impact from expected supply shortage on closure of Hormuz strait, where about 20% of global oil supplies was flowing every day.
It looks like markets overreacted in both directions, as situation is very fragile and warning that volatility is going to remain high, although the action in past two days was driven more by speculation rather than reality.
From that point of view, President Trump’s signals (end of the war / lifting sanctions) need time to materialize, while the world hasn’t really felt stronger supply shortage so far.
However, I share a very cautious approach with many analysts, who point to ongoing war (which escalates daily) and the real consequences from oil production and supply shortage that keep the upside at risk.
Res: 90.00; 91.41; 92.50; 95.40
Sup: 83.79; 82.81; 81.20; 80.00
 on Tuesday, following unexpected and sharp change in the sentiment after President Trump said that war in the Middle East could end soon.){kind=link}