WTI bounces up on Mideast tensions, fails to tap $72

The pullback in crude prices witnessed on Monday found support on Tuesday as escalating tensions in the Middle East revived fears of an oil supply disruption, while Russia is pressuring OPEC+ to reconsider further output hikes.

The price of the West Texas Intermediate barrel bounced up from Monday’s lows near $68.00. Upside attempts have remained limited below the $72.00 level so far, but still at levels 12% above May’s trading range.

The escalating war between Israel and Iran is supporting oil prices.

A new exchange of missiles Monday night and US President Trump’s early departure from the G7 after calling a meeting of the National Security Council have boosted concerns about a potential involvement of the US in the conflict, which could lead to supply disruptions and higher prices.

Beyond that, Russia’s Deputy Prime Minister, Aleksander Novak, has urged OPEC+ to revert their decision to hike crude output as, he reckons, oil prices are not appropriate for most producers at the moment.

In the economic calendar, the American Petroleum Institute (API) will release the weekly oil stocks report, which might have some impact on prices. Beyond that, the US Retail Sales are expected to have contracted in June, which might add pressure on the Fed to lower interest rates in the coming months.

The Fed will release its economic and monetary policy projections on Wednesday, with investors looking for hints of further monetary easing in the near term. Such a scenario would support growth in the world’s leading economy and increase demand for oil. The impact on crude prices would be positive.

(Source: OANDA)