Oil prices jumped sharply in volatile trade after President Trump warned that the US would intensify military attacks against Iran over the next two to three weeks. The front-month Brent contract was still trading below resistance at $110, but front-month WTI once again broke above its own resistance level of $100 per barrel.
Source: TN Trader
There was also a shift in the futures curves of both contracts. This saw the price of oil for delivery within the next few weeks trade at a premium over spot, before dropping back significantly over the summer. The obvious takeaway from this is that investors expect the oil market to tighten further over the next few weeks, before loosening up six-to-eight weeks hence.
Also, the premium for Brent over WTI has come in substantially, and this could be on expectations that, following comments from Mr Trump, Europe may end up increasing purchases of US-produced product. That may be the case in the short-term, but much depends, yet again, on how quickly the Strait of Hormuz can be made safe for seaborne cargoes.
