Last week the oil market was clearly in a bearish mode. No matter how bullish the news were. Oil fell several times last week. The WTI oil price fell by a total of 4.20 Dollars to 56 Dollars Friday evening. We talked about a hell of a ride during last week’s movement in the oil market. Until this morning the market is experiencing a mini rise to currently 56.65 dollars in the WTI oil price. If we look at the chart (since Friday 12th of July), we cannot really speak of a turnaround. The current move is still too small for that.
Iran: CIA brings life to oil price?
According to recent reports a CIA spy ring in Iran was allegedly uncovered. 17 people allegedly working for the US Secret Service were arrested. Some of them were sentenced to death. Well, what a coincidence in time, we might say? Just last week Iran occupied a tanker of a Swedish shipping company under British flag and is now holding the crew captive in an Iranian port. It should also be borne in mind, however, that the United Kingdom seized an Iranian oil tanker shortly before Gibraltar because it allegedly wanted to deliver oil illegally to Syria.
Also last week Donald Trump had announced that the USA had shot down an Iranian drone which would have threatened a US warship. Iran denies having lost a drone at all. And so the conflict in the region seems to continue to escalate. Puhhhhh, we might say. Who started it, who is right and who is lying in this conflict? We do not know. But the fact is that the price of oil is not rising. As we said. It has fallen sharply for days. This very fresh CIA story seems to have triggered the current push in the oil price by +60 cents to 56.78 Dollars. But with the mixture around Iran, the oil price is still at a damn low level!
The British government is currently weakened. Theresa May is more than a “lame duck”. The day after tomorrow she will probably hand over her office to Boris Johnson. But he could want to demonstrate “strength” as the first official act. Thus the conflict with Iran could escalate further? Well possible! Against a rising oil price, the fear of the global weakness in demand for oil (economic downturn), which is hovering above everything, is currently oppressive. Statements by the ECB on Thursday regarding an even softer monetary policy could push the markets (new stimulus for the economy) upwards again, including the oil price! (could, not necessarily). On Friday it was announced that the number of active oil wells in the US has decreased from 784 to 779 week-on-week. This, too, is currently a mini bright spot for the oil bulls.