Some volatility has returned to the oil market as both Brent and WTI contracts have bounced sharply. This time last week, most tradeable oil contracts had pulled back to levels last seen before the US/Israeli attacks on Iran at the end of February.
Prices then consolidated at these lower levels. Yet the various daily MACDs indicated that oil was extremely oversold, perhaps more so than at any time since some prices went negative in March 2020 due to Covid lockdowns. This set the stage for a rebound. And President Trump provided the trigger.
From Monday’s low, just before Mr Trump said the ceasefire was over, to the high hit yesterday afternoon, front-month WTI added 12%. Prices dropped overnight, but investors remain concerned by renewed military action between the United States and Iran, and fears over potential disruptions to energy shipments through the Strait of Hormuz.
Source: TN Trader
Traffic through the Strait had been steadily picking up over the last few weeks, and this had been a large reason for the drop in oil prices. But now transit through this chokehold looks set to face disruption again, and the outlook for future oil prices looks more uncertain than ever.
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