Oil-Bulls remain heavily dependent on geopolitics to sustain the rally
13 July 2018 ( Lagos ) : The fact that Oil prices have depreciated sharply following news that Libya will restore its oil production continues to highlight how bulls remain heavily dependent on geopolitics to sustain the rally. There is a strong possibility that geopolitical risk factors play a significant role in where Oil concludes this quarter.
Falling production from Venezuela and Canada, coupled with looming sanctions on Iran, have provided a solid argument for Oil to remain at such elevated levels. However, speculation is in the air that Saudi Arabia will be tapping into its spare capacity of 2 million bpd to add more Oil to the markets, while US Shale production remains as robust as ever.
This could be a volatile trading quarter for Oil markets, as investors juggle with the various themes driving prices. It should be kept in mind that a trade war is seen as a threat to global growth, which in turn may negatively impact demand for commodities. A possible fall in global demand for Oil could present downside risks to oil prices.
Source: Lukman Otunuga, Research Analyst at FXTM
Reporting for EasyKobo on Friday, 13 July 2018 in Lagos, Nigeria
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