Crude oil spot prices pushed higher yesterday but are giving back a bit today after Iranian Vice President Mohammad-Reza Rahimi released a warning statement that international plans for damaging economic sanctions would be met with a total blockade of oil shipments through the Strait of Hormuz -- a long-time nightmare for oil markets. The Strait of Hormuz is the main route for oil tankers in the region, representing some 40% of the global seaborne supply.
The threat surrounding the Strait is nothing new, so as we are seeing today, the headlines of global tension in the region have limited ability to drive prices until there is substantial escalation.
Until then, sentiment will be focused on the euro zone debt crisis even though Italy had two successful bond auctions today.
Looking at crude oil from a technical view, traders find that spot price took out the top of the downward channel formed back in mid-November.
Price appears to be looking to test resistance at $101.80, which is the closing high for the second part of 2011. Target from here will be the next level of resistance set on November 17's intraday high of $103.35. Since price has moved out above the channel, the top range of the channel -- $99.72 -- now becomes support in the near term.
Traders can gain exposure to the WTI Crude Oil through the United States Oil Fund LP ( USO , quote ) ETF which seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light sweet crude oil.
The fund will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges
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