Crude oil is pushing its highest level in almost three years as the market prepares for a big news on Iran. Is another breakout coming?
TradeStation shows Nymex crude oil futures (@CL) up almost 2 percent to 69.70 this morning. If they hold those gains, it would be the highest close since July 2015. Back then, energy was crashing as the global economy slowed. But this year, it’s been ramping as growth accelerates and the Saudis impose a new discipline on OPEC.
And then there’s Iran. U.S. President Donald Trump must decide by May 12 whether to undo the controversial 2015 nuclear pact brokered by predecessor Barack Obama. Trump says it does too little to prevent the terrorist state from developing nuclear weapons. Traders know his tough-guy approach worked with North Korea, so they increasingly expect the White House to scrap the deal. The result will be trade sanctions against Tehran.
Did you miss our recent special report on energy?
Click here for access!
Analysts estimate such a step could remove as much as 1 million barrels of Iranian crude from global supplies, which is why @CL’s been on the rise.
Equity investors have already been following the trend by bidding up the SPDR Energy Fund (XLE) 8 percent in the last month. No other major sector ETF holds a candle to that kind of return.
Commitment-of-traders data from the Commodities Futures Trading Commission also shows oil drillers no longer increasing their sales of forward production. That comes despite rising U.S. output, and may signal that even company executives are feeling bullish about crude.