Iraqi Army Halts Insurgents And Oil Prices For The Time Being
Today’s Spotlight Market
Crude Oil futures halted their recent climb, as Iraqi forces managed to slow down advancing insurgent forces. Nonetheless, the situation in the nation could underpin Oil prices. President Obama is sending some 275 forces to the nation for embassy security, but emphasized that he did not intend to engage in a military operation in the country. So far, not a single barrel of Oil has been displaced by the conflict, and most analysts do not expect a supply disruption. The Iraqi army did abandon the area near Kirkuk, the fourth largest Oil field in the country, but Kurdish forces stepped in and are now defending the area. Even though supplies have not been disrupted, prices can be seen as sensitive to developments and we may see a fear driven market.
Fundamentals
Iraq is expected to ship 2.79 million barrels a day from its Basra terminal in July, which is a very healthy output. In the US, traders will get API data this afternoon and EIA data tomorrow to digest. Traders may wish to keep an eye on Cushing, OK inventory levels, which have shown a pattern of destocking since the Keystone pipeline became operational. Inventories at the hub shrank 32% in April and May alone. Stocks there are at their lowest levels in two and a half years. Analysts are expecting the EIA to report that Crude Oil inventories shrank by 750,000 barrels this past week. On the product side, traders are expecting gasoline inventories to have fallen by 550,000 barrels, while distillates are forecast to have climbed by 350,000 barrels.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Crude Oil contract steadily climbing since the beginning of May. Prices have seen a bit of a sharper upturn recently. Prices are trading above previous resistance near $105, however, are in danger of failing to confirm a breakout by retreating. The RSI indicator is showing overbought levels, which can be seen as slightly negative in the near-term.
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