Why Is the Oil Price Rising Today?
by Andreas Exarheas
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Crude is rising following headlines that Iran plans to launch a missile attack on Israel.
That’s what Rebecca Babin, a senior equity trader for CIBC Private Wealth in New York, told Rigzone, adding that “the market is set up short and these headlines are sparking a short covering rally”.
“The reaction so far in crude is measured and not indicating panic or imminent supply disruptions,” Babin told Rigzone.
“The key factor will be how Israel responds and if they will target energy infrastructure. In the near term, we could see a few more dollars of short covering in crude before supply from sellers looking to fade risk rallies step into the market,” Babin went on to state.
Several other analysts echoed Babin’s comments when asked why the oil price is rising today.
“[The] rally is based on reports that Iran is preparing to launch missiles against Israel, according to U.S. officials and as reported by Bloomberg,” Tamas Varga, an analyst at PVM Oil Associates, told Rigzone.
“It’s up on the headline that Iran is preparing a missile launch against Israel,” Brian Leisen, a Global Oil Analyst at RBC Capital Markets, said, responding to the question.
“Rumors that Iran is preparing to attack Israel with rockets,” Bjarne Schieldrop, the Chief Commodity Analyst at Skandinaviska Enskilda Banken AB (SEB), told Rigzone in response to the question.
In a market analysis sent to Rigzone earlier today, Mazen Salhab, the MENA Chief Market Strategist at BDSwiss, highlighted that “oil futures continued to decline today despite increasing geopolitical tensions”.
“The market could remain under pressure as prospects of future increases in supply from OPEC+ overshadow lingering fears over escalating tensions in the Middle East in addition to the concerns about demand levels,” Salhab said at the time.
“OPEC+ could start phasing out its production cuts in December, potentially putting more pressure on prices. At the same time, concerns about demand, particularly from China, remain prominent,” Salhab added.
In the analysis, Salhab said the Chinese manufacturing sector contracted in September, pressuring crude oil prices. Salhab added, however, that the recent announcement of stimulus measures may help improve economic growth in the coming months and drive more demand for crude.
The BDSwiss representative noted in the analysis that “the ongoing conflict in the Middle East has not significantly impacted the oil supply for the moment, leaving the market’s reaction relatively muted”.
“Meanwhile, traders could monitor U.S. crude oil inventory data to assess demand levels in the United States. Larger than expected drawdowns could help stabilize the market,” Salhab said.
by Andreas Exarheas
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas