Summer vacations are typically replete with long-distance trips, which would put oil prices in an uptrend, but oil futures fell 1.5 percent recently to the lowest level in two weeks. This came even after the U.S. Energy Information Administration (EIA) reported inventories of gasoline and distillate fuels grew by 9.25 million barrels the previous week.
The EIA figure even went above analysts’ expectations. Hurricane Barry even caused crude inventories to decline by more than 3 million barrels, but that wasn’t enough prop up oil prices to satisfy the bulls.
“We’re at the heart of summer driving season, so you would expect demand to be at it’s highest right now,” said Brian Kessens, a portfolio manager and managing director at Tortoise in Leawood, Kansas.
Speaking of long drives, the lull in oil prices has been driving gains for the the Direxion Daily S&P Oil & Gas Exploration & Production Br 3X ETF (DRIP), which is up almost 30 percent the last five days.
Prior to the latest declines, it looked like oil prices would trend higher after U.S. President Donald Trump decided to bring down the hammer with more sanctions on Iran in response an unmanned U.S. drone being shot down last month. As U.S.-Iran relations remain tenuous, oil traders could be eyeing more price increases for the commodity, but are they overestimating the impact of the latest sanctions?
Oil prices could maintain their support levels this week as tensions between the United States and Iran continue to play out with U.S. Secretary of State Mike Pompeo saying that “significant” sanctions could be in store for Iran.
Rather than resort to war, U.S. President Donald Trump decided to bring down the hammer with more sanctions on Iran in response an unmanned U.S. drone being shot down the previous week. As U.S.-Iran relations remain tenuous, oil traders could be eyeing more price increases for the commodity, but are they overestimating the impact of the latest sanctions?
U.S. intelligence was quick to identify Iran as the culprit of the attacks. According to video evidence, Iran’s Revolutionary Guard was shown removing an unexploded from one of the two oil tankers that were attacked.
The heightened tensions caused oil prices to rise temporarily, but it could’ve been all for naught. Nonetheless, for the more bullish oil traders betting on more price increases, they can look to the United States 3x Oil (NYSEArca: USOU), ProShares UltraPro 3x Crude Oil ETF (NYSEArca: OILU) and the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares (NYSEArca: GUSH).
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