Crude oil prices struggle to stage a recovery after a correction from the fresh November 2014 highs close to $75. Brent is stuck around the $73 figure on Thursday, with the 20-DMA acts as support for bulls for the time being.
Traders hope that Trump will reimpose sanctions against Tehran which will lead to lower oil exports and production from Iran, in addition to OPEC+ efforts and dramatic decline in Venezuelan production. However, the support from the “Iranian factor” looks limited as this scenario is already priced in now. Meanwhile, the US shale companies continue to build their activity, with production climbed to another record high last week, adding 0.3%, which limits Brent’s upside potential at this stage.
As the price oscillates around $73, there is a chance for a recovery towards $73,60 in the short-term. This scenario will come true if the greenback continues its downside correction. But should the USD buyers reemerge, the bearish risks will play out, as there is a general uncertainty in the crude markets this week.
By Helen Rush
Senior Analyst at Capital Markets