The news over the weekend regarding a nuclear deal with Iran
sent oil futures lower on Sunday when electronic trading
West Texas oil futures fell by one percent immediately as
Brent crude, more sensitive to the Mideast, fell by over two
The deal with Iran is only temporary and will initially last
six months. When the deal is broken down it shows that the
sanctions on Iran's sales of oil are not included, suggesting the
fall in oil may be short-term. Then there is the fact that Iran
is not the most reliable partner to strike a deal with. The
country has little to no credibility and what happens over the
next six months is anyone's guess.
Home Depot Boosting ETFs
That being said, this past weekend was a big step in the right
direction as far as halting the Iranian's efforts to towards a
nuclear bomb. That is the reason for oil falling, it is the
market anticipating that at some point the Iranian oil will come
back online and the geopolitical tensions in the region will be
The United States Oil ETF (NYSE:
) tracks the daily changes in the spot price of light sweet crude
as measured by the changes in the price of the near month futures
contract. The ETF has been in a downtrend since topping out at a
one-year high in early September. The 14 percent drop had been
halted three weeks ago and the ETF began forming a basing pattern
as it traded between $33.50 and $34.25.
The low of $33.45 hit earlier this month will be a key level
to watch on trading today and the remainder of the holiday
shortened week. If the support is not held it will send the ETF
to a five-month low and could spur on more selling back on the
Another oil ETF to watch is the United States Brent Oil ETF
), which closed at a one-month high on Friday and has been
outperforming USO the last couple of months. Because of its close
ties to the Mideast, BNO will likely be harder hit on the Iran
news and could test the November low of $40.84 in the coming week
if the selling continues.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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