Markets are rising once again, propelled by instability in Iran. After small 17 cent gains yesterday, crude oil is up 52 cents (0.9%) today, trading at $60.89.
Refined fuel prices took a hit yesterday, experiencing losses of 0.5% (diesel) and 1.7% (gasoline). Today, markets are reversing their losses. Diesel prices are currently up 2.1 cents (1.0%) to trade at $2.0794. Gasoline has experienced smaller gains, but is up 1.6 cents (0.9%), giving a price of $1.7792.
Just a few short weeks ago, this publication forecast a correction followed by an advance. With CFTC data showing near-record high bullish sentiment, a pullback seemed likely – at some point, traders have to cash in their bets and walk away with their profits. Yet prices have risen $3/bbl since then! The latest CFTC data, from Dec 26, showed bullish sentiment rise to its highest level since peaking in early 2017. With markets at a record high, why has there not been a reversal?
The answer is Iran. Protests in the country have added significant instability to oil prices, adding a bit more upside to prices. It’s worth noting, however, that protests so far have not disrupted any oil flows. In addition, technical analysts expect little resistance between current prices and $63. Because many market traders subscribe to technical analysis, the uptrend could keep them in the market for a bit longer. Once markets find a bit of upward resistance, expect a temporary correction, which could be followed by lower prices or a resurgence of bullish sentiment.