Black Gold is En Vogue?

The price of crude oil is
set for the largest weekly gains since early April as troubles in the Middle
East continued. Late last week, Saudi Arabia and the United Arab Emirates (UAE)
reported that a number of their oil tankers had been attacked. This attack was
blamed to Iran supported Yemeni rebels.

Yesterday, Saudi Arabia
responded to the attacks by having airstrikes in Houthi regions of Yemeni. This
means that the crisis in the region will likely continue. If it does, investors
believe that the oil supply chains could be affected, which will affect the
prices.

As these challenges go
on, there are talks in Washington that the US could be in confrontation with
Iran. In recent days, Trump has been in confrontation with his senior leaders
on how to deal with the country. His senior leaders seem to support going to
war with Iran, a decision the president is not comfortable with. He has
signalled that he would want to speak to the Iranians as tensions rise in the
Gulf. While these discussions are unlikely to happen, the president believes
that another foreign war would be devastating to him politically. Most
importantly, the president appears to be disappointed with John Bolton, a
hawkish advisor who seems to favor intervention policies.

The genesis of these tensions
is the Trump withdrawal from the Iran nuclear deal, a decision that his
previous advisors like H.R McMaster rejected. After the withdrawal, the
president implemented large sanctions on the country. These sanctions escalated
a few weeks ago when the administration rejected the idea of extending the
waivers given to eight other countries.

The West Texas
Intermediate (WTI) has risen from a low of $60 and reached to a high of $63.7.
On the chart below, the price is along the 21-day moving averages and above the
42-day moving averages. The RSI has diverged by declining from a high of 83 and
has moved to a low of 50, which is viewed as neutral. Today, the price will
move depending on the news from the gulf regions.

The post Black Gold is En Vogue? appeared first on Forex.Info.