Saudi Oil Attacks WTI levels to watch

Oil prices have resumed higher after initially easing off noticeably following the weekend’s big gap. The US government has alleged that Iran was behind attacks, although Tehran denies any involvement. Houthi rebels in Yemen have claimed responsibility.

The situation remains perilous, and oil prices are likely to move sharply depending on what happens next. Will there be further militant attacks? Will Saudi Arabia and/or the US retaliate, especially if Iran is proved to be involved? The possibility of military action is a risk that investors cannot rule out at this stage. It is also not clear how badly Saudi’s production capacity has been impacted and how long it will take for operations to resume at full capacity. We think that oil prices are likely to fall back once the Middle East situation calms down slightly. After all, the demand outlook remains soft with global data deteriorating – including from the top oil consumer China, as evidenced in the latest industrial data released overnight. From a supply point of view, OPEC’s other members will be more than happy to step up production to make up for some of the short falls in Saudi’s regular crude production. US President Donald Trump has meanwhile already authorised the release of US reserves.

As oil prices soar, it is worth keeping a close eye on crude and related markets such as the major global indices, energy stocks and Canadian and Norwegian dollars, to spot decent tradable opportunities. On that note, here is an intraday chart of WTI, with the key price levels to use as reference points:

Source: Trading View and City Index.

Among the above levels…

$63.00 is an interesting area to watch for it was a key support zone before it broke down back in May, leading to a sizeable drop in oil prices. Once support, could it turn into resistance? The bears would like to see a close below this area, while the bulls would be keen to see strength into the close and a finish above this hurdle.
$59.93 is the most recent low on the 60 min time frame. Thus, if oil prices were to go back below this level, we may see some long-side liquidation. So, if you are bearish on prices, a break below this level is what you may be after, unless an even more significant reversal pattern is observed at higher levels first.
$58.73 was the high from last week – interestingly, this has turned into support earlier in today’s session. An eventual break below here could pave the way for the closure of the weekend gap.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.