Democrat Sweep Sends Crude South
Heavy Oil Selling
Crude prices hit their lowest levels in over two months today following a sharp plunge lower in crude futures which fell by more than 10%. The move lower comes amidst rising hopes for easing geopolitical tensions on the back of the Democrat sweep in the US midterms this week. With the Democrats taking both houses the general view is that the Trump’s aggressive international policies will be thwarted, hopefully leading to an easing of conflicts most notably between the US and Iran. Given that the outbreak of war between the two countries earlier this year has been the chief driver of the rally in oil prices, the prospect of a de-escalation and a road to peace holds the potential to drive oil prices heavily lower.
US/Iran Key
Looking ahead, focus is firmly on the US/Iran landscape. Trump launched fresh attacks against Iran on the eve of the midterms amidst heavy speculation that a fresh offensive is due to be actioned on the back of the elections. As such, incoming headlines will be key for driving near-term price action. Any new suggesting progress in negotiations or a willingness from Trump to step away from the war should see crude selling deepen. On the other hand, any fresh attacks from the US should see oil spiking higher again.
Technical Views
Crude
The sell off has seen price breaking down out of the bull channel from YTD lows and below the 95.06 level. Price is now testing support at the 87.55 level and with momentum studies bearish, risks of a further push lower are seen with 77.65 the next support to note if we continue south.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.