Is an oil rally reversal on the way?

by | 24 May, 2018

Trump is getting flak for high prices at the gas pumps

Oil prices drifted lower today due to the prospect of the first increase in output from OPEC nations (including Saudi Arabia and the UAE) since 2016. The price of the commodity is down over 1.50% since last week (see the chart below).

OPEC cuts to supply are a big part of the reason why oil prices have been climbing over the last year (with Brent Crude notching a 52.57% gain), but if these countries choose to start boosting their output again, (partly to compensate for a lack of supply from Iran and Venezuela) the rally could come to an end. Commerzbank strategist Carsten Fritsch said: “This discussion about possible OPEC supply increases after the June meeting has put a brake on the oil price, so $80 is a big hurdle to overcome.”

Senate Democrats in the US are also urging President Trump to reign in OPEC due to pump prices being at a 3-year high, but unless he chooses to give Iran or Venezuela a pass on sanctions (unlikely), there’s not much he can do.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
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US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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