Oil: Geopolitical tensions remain at a boil – TDS
|Crude oil markets may feel oversold, but trend following models hold a war chest of dry-powder to deploy in either direction, TDS’ Senior Commodity Strategist Daniel Ghali notes.
Crude oil markets seem oversold
“While our return decomposition framework suggests that markets have continued to erode supply risk premia over the last week, geopolitical tensions remain at a boil and traders are awaiting more information on Israel's targets for a strike against Iran, keeping a floor on prices.”
“With prices failing to keep up with downtrend signals, CTAs are still set to cover their shorts this session. The scope for subsequent algo flows remains elevated, suggesting event risks will carry additional momentum over the coming week.”
“Interestingly, nascent signs of reflation continue to strengthen in the cross-section of the commodities complex, suggesting that demand trends could favor more buying activity, offering a cross-current to the erosion of supply risk premia in the event that Israel refrains from targeting energy infrastructure as expected.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.