Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): Entry point at $67-$68 levels this week with a target at $72.3 and stop-loss at $64.54

Crude oil was boosted by demand optimism and crossed $70 levels in recent trading sessions. Is it the right time to enter the market?

Crude oil is on a rally as EIA released the forecast for global oil inventories for the second half of this year; it is predicting a further decline.

Price is high also because there is confirmation that the US-Iran talks are not going to conclude immediately and are going to take longer than expected.

The next round of nuclear talks in Vienna starts on Saturday, 12 June. Old key issues have remained unresolved – the ones about the way the two sides achieve compliance. Moreover, it's too early to say if it will be the last round of talks.

There is also another minor factor supporting the price rise. Supply risk in Libya resulted in crude oil output going down by 20% due to pipeline leaks. However, it has been fixed, and the production is ramping up again.

So, the market is responding strongly to demand signals in the short term. Outlook is certainly bullish with some opportunities to buy the dips – for instance, such a situation happened 2 days ago (Jun. 7).

In summary, oil prices crossed the $70 levels driven by EIA forecasts of a reduction in global inventories and a delay in the US-Iran talks.

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

Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract):

Entry point at $67-$68 levels this week with a target at $72.3 and stop-loss at $64.54

Thank you.

Nishant Jain, MBA, CPSM
Oil Trading Strategist