Oil supported on Middle East Tensions and rising demand forecasts

Crude prices are trading sharply as international tensions soar in the Middle East and on fresh stimulus signals from the Fed.  Iran is showing they are still able to rattle oil markets with the downing of a US drone.  Iran claims the US drone entered in Iranian air space, while the US firmly denies that it is the case.  Iran’s media said the drone was shot down near Kuh Mobarak, on Iran’s southern coast, which is just next to the entrance of the Persian Gulf.

Oil prices are out of bear market territory and appear well supported here.  With demand forecasts receiving some relief as dovish signals are now strong expected to come from both the Fed and ECB.  Demand forecasts could also get another boost if we see a positive outcome with the US – China upcoming trade talk at the G20 summit in Japan.

Crude prices are also being supported as OPEC and allies were finally able to settle on a date to meet and the three biggest producers (Saudi Arabia, Iraq and UAE) are set on extending production cuts for the rest of the year.

West Texas Intermediate crude is higher by 4.9% and Brent is up 3.7%.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya