Oil bulls could be facing a double-whammy within days.
1) It appears as though Russia-Ukraine fears were overblown. Citi suggested a $10 geopolitical bid in oil and given the sharp fall on the climb-down yesterday, that’s not out of the question.
2) An Iran nuclear deal is inching towards conclusion. Iran’s top negotiator had his most-optimistic comments yet today. I would have thought this was priced in more because the signs of have been growing for some time but given the $2 drop on the Iran headlines, this appears to have caught the market off guard.
WTI crude is now trading at $91.56, down from $95.00 earlier. That’s a swift drop.
Add in concerns about inflation, rate hikes and the overall market mood and the risks for oil continue to mount.
Technically, the bulls shouldn’t be too worried so long as $88.40 holds but it might be a case of easy-come, easy-go. Yesterday I highlighted the $78-81 area as a spot to eye on the downside.