WTI is up by more than 1% on the day now
Oil prices are at session highs again now as ongoing geopolitical tensions between the US and Iran continues to help boost sentiment as seen towards the end of last week — after Iran shot down a US drone over the Strait of Hormuz.
Of note, we’re seeing price now close in on the 100-day MA (red line) @ $58.60 and that will prove to be a key resistance level that buyers will have to find a way to break above before further resistance is seen at the 200-day MA (blue line) @ $59.06.
The next week is going to be crucial for oil with OPEC+ members set to meet on 1-2 July to finalise details about extending the current output cuts deal to the end of the year.
But what’s more key in my view is that they will have to look past recent developments in the past week between US and Iran, and instead focus on the bigger picture. The issue remains that the oil market is heavily oversupplied and sticking with the current output cuts quota won’t help to resolve that any time soon.
For oil prices to move higher in a sustainable manner, more cuts is needed than the ones currently put on the table. Should OPEC+ fail to reach such a resolution in the coming week, oil prices could be in for a rougher time in 2H 2019 when seasonal demand dips and as geopolitical tensions begin to fade.