June West Texas Intermediate crude futures are trading flat-to-lower as we approach the end of the week. Volume has been light all week with traders refusing to commit to either side of the market ahead of next week’s major decision on whether to reimpose sanctions on Iraq.
Supporting the market over the near-term has been speculation that new U.S. sanctions against Iran would lead to a disruption in supply which would further tighten global supplies. Iran’s oil exports hit 2.6 million barrels per day (bpd) in April, according to the Oil Ministry, a record since the lifting of sanctions.
Gains have been capped, however, by a stronger U.S. Dollar, which affects demand, and rising U.S. production.
The uncertainties over Iran are helping to underpin prices with buyers coming in on weakness, but refraining from buying enough to drive the market through resistance and into new multiyear highs. This is holding the markets in a range and giving the appearance of a sideways trade.
President Trump has until May 12 to make a decision about the sanctions. Some of the recent surge in prices is being attributed to bullish speculators who are betting that the president will make good on his threat to withdraw from the deal. This is likely to disrupt supply which could be supportive for prices moving forward.
Comments from Iran’s foreign minister triggered a volatile short-covering rally on Thursday after he said U.S. demands to change its…