Technical Analysis

Oil is having a solid day but can the gains last the course?

Oil is caught in between two diverging fundamentals for now

ForexLive

Oil is up by nearly 2% on the day as traders focus more on the rising tensions in the Middle East with Iran having captured a British tanker on Friday. While that dictates for higher oil prices in the short-term, the bigger problem of the market being oversupplied still isn’t going to disappear just like that.

That is something that traders need to weigh up when considering the fundamentals in the oil market currently.

The issue with geopolitical tensions is that they never last. Hence, while oil may get a boost today and potentially as this issue continues to persist, it’s hard to imagine a sustained bounce in price as long as supply continues to outweigh demand handily.

As such, I reckon fading rallies in oil will still be a good play in 2H 2019 amid ongoing tensions seen in the Middle East. For now, price still holds below the key daily moving averages but any move towards those levels and potentially $60 would no doubt prove to be inviting for sellers to jump in.

Not to forget, niggling concerns surrounding the global economy will also do oil no good if things continue down the path seen in recent months.

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