Oil Supply Volatility, $BTC, US OIL, US10Y, Technical Outlook, Edition #175 (18/01/2022)
Risks of armed conflict flare-up in the ME, Oil supply constraints fuelling upside demand ⚡ Read about Surging Yields, Market Structure and a possible rally in the works in tonight's report... 👇
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Risks of armed conflict flare-up in the ME, Oil supply constraints fuelling upside demand
Q begins with an update following last night's coverage of rising US government bond yields.
The 10 Year yields have surged above 1.80% amidst rising tensions fuelled by oil supply constraints of OPEC+ producers—actual oil production lagging far behind official quotas.
At present, US Oil prices trade above a seven-year high over worries of potential supply-side disruptions following Yemen's Houthi missile strike on the United Arab Emirates, which further exacerbates hostilities between Iran and Saudi Arabia.
As reported by Reuters:
"Yemen's Iran-aligned Houthi group attacked the United Arab Emirates in what it said was an operation using missiles and drones, setting off explosions in fuel trucks that killed three people and causing a fire near the airport of Abu Dhabi, capital of the region's commercial and tourism hub."
The Emirates' Foreign Ministry says that the 'UAE has every right to respond' with force. However, whether this flare-up in tensions will continue to escalate and any additional supply constraints—i.e. fundamentally bullish—to oil is yet to be confirmed.
Examine the West Texas Intermediate (US OIL) chart below for a daily outlook on price action…