Crude Up Sharply Driven By Geopolitics & Hurricane Season

Oil prices rose strongly on Monday rising around 2% as tensions grow between Israel and Hezbollah risking war and Hurricane Beryl threatens to disrupt output in the Gulf of Mexico. There are concerns that this could be the start of a bad season which may also impact US coastal refining. The USD index rose 0.1%.

• WTI rose 2.3% to $83.38/bbl and is currently trading slightly higher. It is close to its intraday high of $83.64. The weaker-than-expected US manufacturing ISM added to hopes of a Fed rate cut and thus boosted oil prices. WTI breached resistance at $82.80 on Monday opening up $85.21, the bull trigger.
• Brent is 1.9% higher at $86.63/bbl after a peak of $86.88. The benchmark remains in a bull trend. It broke through resistance at $86.18 and $86.33 yesterday opening up $89.32, April 12 high and bull trigger. Initial support is at $82.87.
• Iraq has consistently produced above its quota but had renewed its commitment to OPEC cuts recently. In June it reduced oil exports, according to Bloomberg. The demand side remains uncertain though with a US refinery reducing output due to soft demand while China’s Caixin manufacturing PMI came in more optimistic than the official PMI.