After an extended period of weakness, oil prices are rising today as tensions in the Middle East, Saudi Arabia’s latest price move, and faint rate cut hopes take center stage. The benchmark crude WTI (CM:CL) is trading up by over 1% at around $79.04 today.
Rate Cut Hopes
The latest nonfarm payrolls (NFP) report came in softer than expected, with 175,000 jobs added in April. The Street had expected an addition of nearly 243,000 jobs. While a single NFP print may not be enough to completely sway the Fed towards a change in its stance, traders are still latching onto the data as a harbinger of an earlier-than-anticipated rate cut from the Fed over the coming months.
Saudi Arabia Raises Prices
While traders take comfort in the soft NFP data, Saudi Arabia’s state oil company, Saudi Aramco, has raised oil prices for all of its energy exports to Asia. According to Bloomberg, this is the third consecutive month of Saudi Arabia raising oil prices to Asia. The price hikes come just as crude oil imports in Asia contracted in April to 26.89 million barrels a day from roughly 27.33 million barrels a day in March. Asia is the highest oil-importing region globally.
Middle East Tensions
Saudi Arabia’s price hikes are aimed at maintaining tightness in the oil market amid indications of easing Middle East tensions in recent weeks. However, tensions in the region could potentially flare up again after Israel started moving civilians out of parts of Rafah as it gears up for a potential push in the city. The actions in Rafah come after truce talks in Egypt failed to bear fruit.
What Is the Oil Price Forecast?
The TipRanks Technical Analysis tool is flashing mixed signals for oil on a monthly time frame, indicating caution may be warranted before initiating new positions for traders.
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