Oil prices rallied after Donald Trump’s threats against China and Iran, with Brent crude prices seeking to secure a price low.
UKOIL – 4H Chart
UKOIL has found support at $67.72, and that has also lifted prices above the downtrend in place from mid-July. A move toward $70.00 is possible, and that could add strength to the current lows.
Oil prices were volatile after OPEC+ raised production levels, before traders focused on Trump’s threats again. The oil group raised production by 547,000 barrels per day for September, which will reverse the most recent output cut earlier than expected.
Oil has bounced from the lows, but the strength of the move shows that traders are sceptical of a supply disruption. Analysts are questioning whether Trump would risk higher oil prices.
“I’d call it a stable market for oil,” said Giovanni Staunovo at UBS Bank. “We assume this likely continues until we figure out what the U.S. president announces with respect to Russia later this week and how those buyers would react”.
India is currently the largest buyer of seaborne crude oil from Russia, with 1.75 million barrels imported from January to June this year. Trump has now threatened sanctions on any nation buying Russian oil.
“Investors are assessing whether India will reduce its Russian crude purchases in response to Trump’s threats, which could tighten supply, but it remains to be seen if that will actually happen,” said Yuki Takashima, economist at Nomura.
“If India’s imports remain steady, WTI is likely to stay within the $60-$70 range for the rest of the month,” he added.
It would be against Trump’s previous goals of reducing gasoline prices at the pump, and it would also keep inflation under wraps. A sharp spike in oil would also delay his desired interest rate cuts further.
