Oil prices rose slightly in trading on Tuesday in volatile trading as analysts’ concerns about crude supply edged out profit taking one day before the July 4 holiday in the United States. Repsol photo.
Oil prices pressured by pressure to liquidate ahead of Independence Day holiday
Oil prices rose slightly in volatile trading on Tuesday with early gains boosting US crude over $75/barrel for the first time in over three years, but profit taking dropped gains as the session progressed.
By 2:48 p.m., EDT, benchmark Brent crude was up 47 cents to $77.77/barrel and US WTI dipped from a session high of $75.27 to $74.19/barrel. Brent dropped to as low as $76.67 and rose to $78.85 during trading on Tuesday.
The Canadian Crude Index tumbled $3.44 to $46.98.
According to Reuters, early gains were made after Iran seemed to threaten to disrupt oil Middle Eastern Gulf oil shipments if the Trump administration carried out on its threat to re-impose sanctions.
The website president.ir quoted Iran’s President Hassan Rouhani dismissing the Trump administration’s attempt to halt Iranian crude exports. Reuters reports that the comments were ambiguous, however, in the past Iranian officials have threatened to block a major oil shipping route, the Strait of Hormuz, in retaliation for any hostile US action.
When asked if he intended to make a threat, Rouhani declined to provide a clarification.
“Just the threat … would add uncertainty and warrant a certain risk premium,” Carsten Fritsch, senior commodities analyst at Commerzbank, told Reuters Global Oil Forum.
But, as the session continued, prices retreated. Gene McGillian, vice president of market research at Tradition Energy told Reuters that oil prices fell after some thought the buzz about supply disruptions may have been overblown.
Traders said supply disruptions will likely be short lived due to rising OPEC and allied producers’ production.
UAE Energy Minister Suhail al-Mazrouei said the United Arab Emirates is ready to help ease crude shortages. He added that OPEC will adhere to “overall conformity levels”. Al-Mazrouei also holds the OPEC presidency for 2018.
Another supply issue is the shutdown of the 360,000 barrel per day (b/d) Syncrude plant in the Alberta oilsands. The facility was hobbled by a power outage last month and is likely to remain shuttered through July.
McGillian added traders may be moving to liquidate bullish positions.
Tariq Zahir, managing member at Tyche Capital added that the pressure to sell may have been high ahead of the July 4 US holiday.