Energy Report: $70.00 Slip

Crude oil prices seem to have lost their mojo as the $70.00 test was met with resistance and profit-taking. It does not help that there is not a lot of new news. There were concerns about a drop in Chinese imports, but we all know that is most likely temporary. There were talks about the resumption of the Iranian nuclear talks that still look like a longshot when it comes to lifting sanctions. There is a story from Bloomberg about 6.0 million barrels of oil in floating storage that does not fit the bullish case for oil and based on market structure, does not even make sense. Yet what looks bearish short term may be more bullish.

Photo by Timothy Newman on Unsplash

China’s attempt to cool commodity prices may work in the short term but in the long term, it is like taming a wild animal. When it turns on you had better watch out. You had better watch out when we get our crude oil data that should show a sizable drop in U.S. crude supply and that should be enough to give the market a boost. In the short term, the lack of news is giving bears a point to get back some losses, but they had better get them why the getting is good.

The AFP reports that the United States, which has for two months been holding indirect talks with Iran on the future of the tattered nuclear deal, said Monday it was not even sure if Tehran wanted to come back into compliance. "We've been engaged in indirect conversations, as you know, for the last couple of months, and it remains unclear whether Iran is willing and prepared to do what it needs to do to come back into compliance," Secretary of State Antony Blinken told the House Foreign Affairs Committee. “We’re still testing that proposition," Blinken said. He says he worries that Iran has been moving leapfrog ahead with its dream to get a nuclear weapon and while he blames the US withdrawal from the 2015 accord, the reality is that Iran was still going to get a nuclear weapon under the old deal.

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