Oil crashed almost three percent as Washington confirmed it spared Venezuela from oil imports ban, prices are trading at $48.61/bbl currently.
Oil’s rally came to an abrupt halt after the US decided not to impose sanctions on Venezuela’s energy sector. WTI crashed to a low of $48.38 after testing highs of $50.20 in the early session driven by concerns over the supply shortage the energy ban would possibly create. The bans are likely to follow in the near future but its implications are far reaching on the US economy itself which imports almost 740,000 bbl/day of Crude from its neighbour in 2016. The proposed ban could reduce domestic supply which in turn could push WTI and gasoline prices in the near term.
The sudden reversal in prices has dented the current bullish trend but we believe the current decline to be another buying opportunity. On the downside, we expect the corrective move to extend further below today’s low at Rs.3107 to be limited to the support zone of Rs.3,060-Rs.3,080 this week. Prices are expected to rebound from current levels and test new highs in the coming week. Traders are also looking forward to the API and EIA reports tomorrow which if shows another draw could be a boost for prices this week.
Source: Commodity OnlinePrevious Next
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