Oil prices moved sharply higher during the far east market open on Monday, initially reaching 66.52, just shy of the 2018 high of 66.63. Prices have recently moved higher partially due to two reasons today, first, China’s Shanghai Yuan-denominated oil futures first day of trading caused prices to bid higher as this newly available market will have a significant impact on the US dollar-dominated oil markets.
I will have a detailed report on that in a few days. Secondly, the other key event today that drove prices higher was the Iranian backed rebels in Yemen launched missiles at Saudi Arabia capital of Riyadh in their efforts to cause havoc and disruption of the world’s leading producer of oil economy.
However, there are several events currently unfolding which will soon see oil prices test $76.47.
Global demand lead by E7 economies demand continues to outpace world supply. The unprecedented oil demand from the rapidly developing emerging economies and the 7 largest emerging markets (E7 China, India, Brazil, Mexico, Russia, Turkey) will sustain oil prices for the next 3 decades as these E7 economies annual gross domestic product (GDP) will witness annual growth rates between 4 1/2%-12% well into the mid 21st century.
Continued Venezuela sanctions and political turmoil will continue to impact Venezuela production cuts and reduce world supply by 1.5 million barrels/day. Events out of the middle east, China Sea, N Korea, Malaysia, Eastern Mediterranean,m Libya, Nigeria continue to impact oil price volatility and potentially affect global supply.
Short-term, traders will continue to bid prices higher on the futures market as northern hemisphere demand moves into the peak season while long-term speculators will seek price dips and breakouts to position for long-term global demand.
Oil is a short-term buy for $76.47 target while bids ahead of $51.43 will support medium-term target of $88.39 in the weeks ahead. Look for daily prices to open above 67.84 and close higher followed by a weekly open and higher close above 67.84 to confirm further price rise initially targeting $68.65 followed by $69.91, $70.92, $71.93, and $76.47 in the weeks ahead.