U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Monday, shortly before the regular session opening. A relative calm in equity futures is helping to support prices, or at least stop last week’s sell-off. This move also suggests today may be a “risk-on” day which tends to be supportive for crude oil prices.
At 0957 GMT, May WTI crude oil futures are trading $62.18, up $0.12 or +0.19% and June Brent crude oil is at $67.35, up $0.24 or +0.36%.
Traders are paying almost no attention to the stronger U.S. Dollar which tends to may on demand for the dollar-denominated commodity. An increase in U.S. drilling activity also doesn’t appear to be a concern.
What traders are watching are reports that U.S. forces had struck a major air base in Syria although the Pentagon denies the action took place.
In other news, OPEC’s number two producer Iraq said on Monday that it is keeping prices for its crude supplies in May steady.
We’re looking at the possibility of a two-sided trade today. Prices will be supported if China or the U.S. says it is willing to negotiate a solution to the simmering trade dispute. However, any escalation of tensions will likely drive prices down again.
The situation in Syria will also become an issue if there is retaliation in response to the alleged U.S. air attack on a Syrian airbase, or if the U.S. escalates the bombing. This action is likely to fuel a short-covering rally initially, however, if it leads to a disruption in supply, we can expect to see further upside action.
Traders could play the short side of the market if the U.S. Dollar continues to strengthen and if the Syrian issue becomes a non-event. At this point, investors will also reaction to concerns over increased U.S. production.
As of the opening, however, it looks like the market will be underpinned by the Syrian news and steady demand for risk.