At 10:06 EST Tuesday, news broke from Dubai-based Al Arabiya that the Iranians had sieged a US cargo vessel in the Gulf. Brent and WTI spiked within minutes as the algos went wild. However, both markets failed to breach yesterday’s high. Within an hour, the market erased these gains as it turned out this was a Marshall Islands-based vessel. So the word “sieged” in the headline may have been a bit of an overreaction, and “US” was clearly just a mix-up. Or was it?
As it turns out, Al Arabiya is actually owned by the Saudi Royal family. Perhaps the Saudis are getting a little antsy looking at the crude oil charts. Since making new yearly highs on Friday, Brent crude oil has been consolidating its gains and has made a lower high and lower low on both Monday and Tuesday. WTI both on the continuation and June charts is also potentially looking a little toppy in the short term. Perhaps the Saudis were trying to stir up what appears to be a restless market to keep a good thing going. With the weekly DOE and FOMC announcement tomorrow, it is feasible to think that friendly news will push oil to new weekly highs and perhaps $70/bbl for Brent. On the flip side, bearish news could drive it $5 lower to retest the previous breakout and the 100 day MA. This is the line in the sand.
On Wednesday, support for WTI will be found at 5661, 5616, and 5510 and resistance at 5767, 5828, and 5934. For Brent, support is at 6423, 6380, and 6274 while resistance is at 6529, 6592, and 6698.
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