The Next Highest Leg for Oil Prices

This week on oil is all about last week. That is to say that the main force that pushes the markets is still the digestion of Trump's surprise move to end Iran's exemption program with the aim of pushing Iranian exports to 0 bpd on 2 May.

So far, Trump seems to be getting what it wants in the deal, in the form of strict sanctions on Iran and moderate oil prices. After an initial price spike of $ 75 late last week, the president was able to push the market down with a series of tweets highlighting the cooperative efforts between the White House and OPEC to maintain the currently well-stocked state from the market.

We are still at least a bit skeptical that the president and his state department are accurately judging the current state of the oil market and the willingness of the Saudis to help keep gas prices where American voters want them. On the fundamental front, yes, the global oil markets are still reasonably well supplied. This is due, in part, to the monstrous production efforts coming from western Texas, which are keeping oil stocks above seasonal standards. Currently, the US has 28.5 days crude oil supply, 0.3 days above the seasonal average of 5.5 years to the end of April and early May. This is a significant indication that oil markets have a reasonable level of cushioning against head shocks. Unfortunately for Mr. Trump, hedge fund managers and physical operators have a substantially more optimistic view on the fundamentals of the market …