The price of a Brent barrel surpassed the $70 mark in morning trading on Tuesday, after a rather rocky start to the week. But is $70 Brent here to stay?
Both the WTI and the Brent benchmarks were trading up on Tuesday by almost 3 percent, with Brent reaching the psychologically important $70 threshold shortly after 9:00am EST. This was a dramatic one-day increase over Monday morning’s level of about $67.00 per barrel. The WTI barrel followed a similar upward trajectory.
In today’s volatile oil market, it can be tough to assign any single catalyst to oil price movements; often its many catalysts, other times it’s an undefinable one. While it may be tough to finger one specific catalyst, the weaker dollar, followed by geopolitical unrest over Venezuela, Iran, Russia, Syria, N Korea, and of course China, are likely culminating in somewhat of a perfect storm, helping to lift oil prices.
One of the immediate factors helping to lift Brent above $70 was Trump’s Monday promise to respond “forcefully” to the suspected chemical attack in Syria. Russia responded in kind with threats of repercussions should the United States follow through with military action. Then Chinese President Xi Jinping showed signs of relenting in the trade spat with the United States, promising to open up China’s economy, including lowering tariffs on cars and enforcing intellectual property of foreign firms—something that the Trump administration has been eyeing for some time.
Also on Tuesday the United States gave the EU a May 12 deadline to redo its agreement with Iran that saw an end to sanctions over its nuclear program.
Further price swings are in store for later this afternoon, as the American Petroleum Industry releases its most recent figures that quantify US crude oil, gasoline, and distillate inventory at 4:30pm EST.
By Julianne Geiger for Oilprice.com
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