Crude Oil News Today: Traders Downplay Iran-Saudi Instability, Eye OPEC+

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Brent and WTI Crude Extend Gains on Geopolitical Uncertainty

Brent crude and West Texas Intermediate (WTI) crude prices are edging lower on Monday after giving back earlier gains. Shortly after the opening, short-sellers covered and speculators bought aggressively due to political instability in key oil-producing nations. The market reacted to the death of Iran’s president in a helicopter crash and health concerns surrounding Saudi Arabia’s king.

However, the subsequent price action suggests traders are downplaying the news and shifting their focus back to the traditional fundamentals such as OPEC’s upcoming meeting. Brent ended last week up by 1%, marking its first weekly gain in three weeks, while WTI rose by 2%, buoyed by positive economic indicators from the U.S. and China.

At 09:38 GMT, Light Crude Oil Futures are trading $79.36, down $0.22 or -0.28%.

Iranian President Dies in Helicopter Crash

Iranian President Ebrahim Raisi and his foreign minister died in a helicopter crash in the mountainous terrain of East Azerbaijan province. The crash was attributed to icy weather conditions, and the wreckage was located on Monday, causing shockwaves through the market due to potential instability in one of the world’s major oil producers.

Health Concerns for Saudi King

Separately, Saudi Crown Prince Mohammed bin Salman postponed his visit to Japan citing health issues faced by King Salman. The 88-year-old king is undergoing treatment for lung inflammation. This development adds another layer of uncertainty in the energy market, which is closely monitoring the health of the Saudi monarch, a key figure in global oil politics.

OPEC+ Maintains Oil Demand Forecast

OPEC’s latest report maintained its forecast for strong global oil demand growth in 2024, predicting a rise of 2.25 million barrels per day (bpd). The report also highlighted a shift in focus towards OPEC+ demand, underscoring the group’s significance in the current market framework. OPEC+ will meet on June 1 to discuss extending voluntary output cuts into the second half of the year.

U.S. Strategic Petroleum Reserve Refill

In the U.S., the government capitalized on the recent dip in oil prices, purchasing 3.3 million barrels at $79.38 each to refill the Strategic Petroleum Reserve. This move follows the significant stockpile sales of 2022, aimed at stabilizing the market.

Market Forecast: Bullish Outlook

Given the geopolitical uncertainties and positive economic indicators from major oil consumers, the crude oil market is expected to maintain a somewhat bullish outlook in the short term. The potential for further price increases remains, particularly as market participants await clarity on OPEC+ output policy decisions in the upcoming meeting.

Technical Analysis

Daily Light Crude Oil Futures

Light crude oil futures are edging lower on Monday after reversing earlier gains. The failure to sustain the move puts the market’s current three-day rally at risk. This could lead to a retest of the 200-day moving average and nearest support at $78.21

A resumption of the uptrend could lead to a late session acceleration with the 50-day moving average at $81.01 and the short-term 50% level at $81.43, potential targets.

This article was originally posted on FX Empire

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