Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Long positions with entry at $63-63.5, with $59.7 as a stop-loss and $68.20 as the initial price target.

WTI Oil futures are lower this week due to the news that Iranian Oil will hit the markets soon. Is it going to fundamentally change the oil supply-demand situation?

Not only it is highly unlikely that Iranian oil will meet the projected rising demand, but, more importantly, it will take some time before Asian clients start buying it from Iran. Supplier switching must make sense economically, and there is a constraint when it comes to payments, as the US has blocked Iran’s access to the American financial system.

Covid cases in India and Japan have started to come down, and it seems that we are most certainly past the peak of this wave. India’s daily new cases are now 0.25 million compared to the peak of 0.4 million. So, by the end of June, we should see a near-normal resumption of economic activity in India.

Not much more has changed since the last OTA. The dollar index is still below 90, oil demand rises in the US, Europe and China, and there are signs of recovery in India as well as in Japan. Therefore, the current price point remains an attractive entry point for a long position.

To summarize, oil has over-corrected itself after the news of Iran-US deal progress and bounced back a bit during the last session. It seems that this is the true extent of the impact of Iranian oil on the market, as we can see strong support at $62 level.

As always, we’ll keep you, our subscribers, well-informed.

Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Long positions with entry at $63-63.5, with $59.7 as a stop-loss and $68.20 as the initial price target.

Thank you.

Nishant Jain, MBA, CPSM
Oil Trading Strategist