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The Bear comes alive: Multiple Persian Gulf attacks this week send oil futures 10% higher

Jun 21, 2019

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  • It was not too long ago-earlier this month-that oil entered bear market territory on a mixture of robust supply and slipping global growth outlook 
    • The US keeps setting production records and stockpiles have been increasing
    • At the same time, the outlook for the both the US and global economy is cloudy at best, with most data points indicating a slowdown is already underway
  • This week, however, the oil landscape shifted a bit, with a series of events in the Persian Gulf pushing oil futures 10% this week

More on the US economy

US Manufacturing PMI unexpectedly falls to 9-year low with trade war and slowing global economy clouding outlook

The case for providing accommodation has increased,” so says Federal Reserve Vice Chairman Richard Clarida today 

The bond market is speaking loud and clear, but is the Fed listening?

Can you see that in the distance? It's a Fed rate cut coming....for now Fed leaves rates unchanged

How well are stock investors positioned for downside? Better than it appears...

Builders Getting Bummed Out: Home Builders Sentiment unexpectedly drops in June, defying expectations for improvement

  • Oil traders have had to contend with the following this week:
    • Mine attacks on 2 oil tankers in the Persian Gulf that the US says were perpetrated by Iran
    • A missile attack in Iraq close to an ExxonMobil facility
    • A cruise missile attack on a Saudi power plant, alleged to have been undertaken by Iran-backed Houthi rebels
    • A drone attack on a Saudi airport by Iran-backed Houthi rebels
    • Iran shooting down a US drone over the Persian Gulf 
  • Most observers expected the US to respond with a measured attack on Iranian assets, but that did not materialize-yet
  • While futures backed off earlier gains in the wake of the US no-attack, the atmosphere for oil remains tense
  • OPEC has cut production and has pledged to keep the lower production for even longer than originally agreed to, but it is geopolitical developments that are likely to drive oil near term 

 

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WTI Crude Futures Active Contract - 2019 Year to Date

oil futures

Sourcec: Bloomberg

 

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