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%.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street 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 CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya