Iran Deal Threatens Supply Shock—Will Bulls Defend the Range?

Energy Update

/ by Blue Line Futures

Iran Deal Threatens Supply Shock—Will Bulls Defend the Range?

WTI Crude Oil Futures (May)

Yesterday’s Settlement: 61.33, down -0.20 [-0.33%]

WTI Crude Oil futures finished the day lower, driven by Dollar strength, fundamental selling, and reportedly positive progress on US-Iran nuclear talks.

The progress has been surprisingly good after the first round of US-Iran nuclear talks. The US has walked back its initial red lines of uranium enrichment and the existence of a nuclear program in general, and has instead focused on restricting weapons production and missile types.

If these talks continue to progress smoothly, and Iranian barrells are let back onto the export market, it would once again present a bearish catalyst to this market.

As we stated yesterday, the forward-looking crude oil balance sheet with OPEC’s accelerated production ramp looks bearish, and prices will have a negative drift on days without headlines.

Today, Crude Oil is up +0.59 [+0.97%] to 61.34

China has signaled it’s open to US talks this morning, driving futures higher. The Chinese have laid out some prerequisites before they’ll talk, including the US “showing more respect.”

The Dollar is still trading weaker this morning but has rebounded off the lows. The overnight Chinese news has shifted the macro trade to risk on.

After the close yesterday, the API reported the following weekly figures [thousand bbls]:

Crude: +2,400
Gasoline: -3,000
Distillates: -3,200
Estimates for today’s EIA report are as follows [thousand bbls]:

Crude: +945
Gasoline: -1,707
Distillates: -1,140
Refinery Utilization: +0.45%

Technical Analysis:

Volatility has been tame this week, but could shift at any second with a headline. Our technical view has not shifted much this week, and the Chinese news could help support a bullish tilt.

We’re eying a run back up to last week’s highs of 63.34**. A settlement above here would set us up for considerable chart repair if we get a settlement above 64.10****.

Failure to retest last week’s high of 63.34 keeps momentum squarely in favor of the bears, keeping a run back to the mid-50s in the cards.

Prices are likely consolidating between the lows made last Tuesday of 57.88** and the highs made Thursday of 63.34**.

For intraday trading our pivot and point of balance is set at 60.88 with support at….

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy, and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third-party application. Blue Line Futures employees use only firm-authorized email addresses and phone numbers. If you are contacted by any person and want to confirm your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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