The oil has been at the mercy of the oil producing countries (read Saudi Arabia) which apparently are comfortable with Brent above $80 per barrel. $80 serves as a significant psychological barrier which was last broken down on Nov 25, 2014 when the high for the day was $80.42/barrel. After that the recent attempt on May 22 this year, to go above that has proved to be futile. The immediate resistance is seen at 80.48 while support at 78.88. If consecutive close above $80.48/b is seen, it can trade in the territory chartered 4 years back in 2014. Though Relative strength (RSI) around 60 for past month indicates correction from the current levels.
Trading at $79.31 per barrel, Brent oil seems to be quietly watching the supply concerns surrounding US sanctions on Iran. Ever since Trump talked of imposing the sanctions from November, its potential impact on global supply has come in focus. Post this, with overall outflows down markedly, the Iranian crude flows are taking shape. As seen in the graph below on Iran’s oil exports to Asia and its impact of reduction of Iranian crude oil from China (red), India (green), Japan (grey) and South Korea (blue).
US crude oil inventory, which measures the weekly change in the number of barrels of commercial crude oil held by US firms, fell by 2.057 million barrels last week, but inspite of that oil prices rallied significantly.
OPEC meeting in Algiers this weekend, with the Russia-led non-OPEC partners in the production cut deal will review the oil market and discuss how the 1 mbpd production increase as pledged in June will take place.