The price of oil fell under the power of geopolitical risks
In the oil market continues climbing to new heights. Eve Brent quotes at the moment exceeded 73, making fresh highs for 3.5 years. By the end of the trading day the price fell back under 72, but remained in decent positive territory, continuing the positive dynamics today in the morning session.
Resource segment is now reacting solely on geopolitics. On the background of ominous rhetoric trump and the aggravation of the situation on the Syrian issue, oil traders started to lay in the price of the beginning of hostilities in Syria.
Feeding the bulls added a missile attack on Saudi Arabia. The power of the Kingdom intercepted a ballistic missile over the capital, and two more shot down in the South of the country. And accused of those attacks Iran, which threatens to further aggravation of the conflict between the two largest OPEC exporters and may affect the supply of oil from these countries.
Fixated on geopolitical factors, as well as taking advantage of the retreat of the threat of a trade war between the US and China, oil fell into the euphoria, completely ignoring another negative signals from the shale gas industry of America, where production has reached a new record, having increased last week by 65 thousand barrels per day. Crude oil inventories rose by 3.3 million, and increased gasoline stocks.
The current rally in Brent is fundamentally unreasonable and overly emotional. The risks in the geopolitical arena is really high, and these factors are unlikely to soon leave the scene. And the situation between Saudi Arabia and Iran in General can result in a prolonged confrontation. However, since the main and only component of the drivers of the current growth is geopolitics, any signs of release of tension or resolution of any contradictions, at the same Syria, may result in no less vigorous bearish correction on profit taking. And it can happen at any time.
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