U.S. West Texas Intermediate and international-benchmark Brent crude oil inched up to a new high for the year early in the session on Tuesday before pulling back slightly. The early strength is being supported by reports that the Trump administration is considering more sanctions on Iran and that an important Venezuelan export terminal has halted operations.
Additional support is being provided by a Reuters survey that showed OPEC oil supply sank to a four-year low in March, and positive manufacturing reports from China and the United States.
At 08:01 GMT, May WTI crude oil is trading $61.67, up $0.08 or +0.13%. This is down from an earlier high at $62.02. June Brent crude oil is at $69.05, up $0.04 or +0.06%. It hit a high of $69.50 earlier in the session.
According to a senior Trump administration official, the U.S. government is considering additional sanctions against Iran that would target areas of its economy that have not been hit before. The official also suggested that the U.S. may not extend waivers from sanctions on Iranian oil exports to a group of eight importers that expire next month.
Additionally, Venezuela’s Jose crude export terminal has halted operations due to the lack of electricity supply, two sources with knowledge of the situation said.
Everything seems to be coming up roses for bullish crude oil traders and we don’t even have a U.S.-China trade deal in place yet.
All the concerns over future demand seem to have disappeared with the stronger-than-expected manufacturing numbers from China and the United States. This means speculators can go back to focusing on the supply side of the equation. Conditions are getting tighter which means speculators can play the long side more aggressively and with more confidence.
Later today, prices could get a boost from the American Petroleum Institute’s weekly storage report that could signal another drop in supply. Early estimates are calling for a 700,000 barrel decline in inventory.
Furthermore, a recent report showed a drop in U.S. production, and U.S. oil producers are cutting the number of producing rigs.
For WTI traders, the next objective is $63.45 with support coming in at $59.63. Brent traders have a target at $71.77 with $67.90 support.