Oil opened with a gap up in Sunday evening (US time) futures trade:
Escalation in the Middle East centred on two recent items:
- Late last week a Trafigura-operated fuel tanker was hit by terrorist missiles.
- Over the weekend three US servicemen were killed in an attack
After the gap up oil has dropped back:
Curiously I could do a similar update on gold, it too gapped higher:
Its a little different in price action, it covered its gap and began heading higher:
Does oil follow higher?
Some commentary from ANZ suggest that answer should be ‘yes’, noting a change in the supply outlook:
- “Disruptions to supply have been limited, but that changed
on Friday after an oil tanker operating on behalf of Trafigura
was hit by a missile off the coast of Yemen,” - “With oil tankers linked to the U.S. and UK now under threat
of attack, the market is likely to reprice the risk of
disruptions.”