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Hormuz Strait Ambiguity Masks WTI’s Structural Supply Friction
WTI Crude Oil remains difficult for retail traders to try and gain meaningful insights fundamentally as news flow regarding shipping via tankers in the Hormuz Strait remains a debated topic. The price of the commodity the past week and going into this weekend though is reflecting concerns among larger players who presumably have more information about the amount of Crude Oil being transported in the Middle East. Making WTI Crude Oil even more adventurous for day traders is the likelihood that speculative forces are impacting current price action.
Conspiracy Minded Folks and Relatively Expensive Crude Oil
Sources depending on if they are believed or not, have reported that a large number of oil tankers have been able to go through the Hormuz Strait quietly this past week via escorts from the U.S Navy. However, on the other side of the coin last week’s highs culminated on Thursday and Friday with a strong surge higher. The temptation to believe in optimistic news which states Crude Oil is effectively being shipped in the Hormuz Strait is important regarding economic outlooks regarding inflation.
Conspiracy minded folks may look at the positive supply and transportation news in a couple of different ways, one that the information is a falsehood being brought forth by the U.S White House. Two, on the opposite spectrum could be that the information is true, but that some large traders are negating the supply numbers to create tension in the WTI Crude Oil market – keeping it relatively expensive.
Economic Strangulation Against Iran and Reality of Higher Price
WTI Crude Oil went into this weekend near the $86.630 price, lower than its high seen on Thursday when the commodity touched the $87.700 vicinity this after a value of $84.500 had been seen only a few hours before. It stands to reason that large players were reacting to reports regarding supply concerns, but is hard to know what the speculative influences were exactly.
While the U.S White House has certainly been claiming victories regarding their economic strangulation on Iran, the Iranians on the other hand have been maintained a loud and defiant rhetorical stance. Adding flavor to the supply story yesterday was that Iran is going to allow Iraq to use the Hormuz Strait to ship. In other words, the entire storyline regarding shipping and supply of Crude Oil via the important waterway remains a ‘who do you trust’ fixture. The price of WTI Crude Oil in reality is now maintaining a higher tiered realm, but still below values that could set off alarm bells by remaining below $90.000.
Big Players Generating Price Momentum and Cautious Sentiment
Price velocity should remain a vital concern for day traders tempted to participate in WTI Crude Oil. Moves of one to three USD in the commodity are still sparking rather quickly and this poses a danger for all leveraged trades and smaller sized accounts that cannot handle price direction that goes against desired results. The opening tomorrow for WTI Crude will likely depend on what news developments find the biggest sounding board the remainder of Sunday. But before a trader makes a decision of what WTI Crude Oil is going to do on Monday morning, they should also consider the possibility that speculative momentum is influencing values too. Meaning that even if optimistic news is being generated about solid supplies and open sea lanes, that the higher price may remain intact as a combination of cautious sentiment and bets on higher prices by big players have power.
WTI Crude Oil Price Chart
Whirlwind of Middle East News and Reactive Price Swings
The constant threat of sudden changes in the Middle East remains a danger for traders. While WTI Crude Oil has in some respects delivered a rather known price realm the past month, it is also keeping all players in the commodity uneasy because of its volatility. Information regarding supply remains ultra-important but an onslaught of rhetoric from President Trump or the Iranians remains a part of WTI Crude Oil price. Although it is also realistic to say some traders may look on rather skeptically at developing news as it is communicated by media sources, reactions to a whirlwind of Middle East news can affect prices.
Narrative is Important in the WTI Crude Oil Storyline
WTI Crude Oil may look expensive to some day traders who are tempted to believe the price should go lower, particularly if they believe the news regarding more oil tankers moving in the Hormuz Strait. Effectively acting as a counterweight to that narrative are reports that claim the shipping details are a falsehood. A lack of clarity remains king in the WTI Crude Oil storyline. Except there is on thing that is definitely true, the price of the commodity remains relatively high.
WTI Crude Oil Short Term Outlook:
Current Resistance: 86.850
Current Support: 86.200
High Target: 88.100
Low Target: 84.200
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