Crude oil WTI coiling around $70.00 ahead of Trump’s Iran decision

• US President Trump will announce its decision on the Iran deal at 18:00 GMT.
• Crude prices are coiling around the 70.00 handle ahead of Trump’s speech. 

Crude oil West Texas Intermediate benchmark is trading at around $70.25 a barrel up 0.2% as investors are awaiting Trump’s decision on the Iran deal. 

Crude prices are in a strong bull trend for several reasons however the main driver affecting the black gold market those last days are the uncertainties related to the Iran deal. 

US President Trump has repeatedly said that he strongly disagrees with the terms of the current Iran deal. Crude prices have been rising as traders are anticipating a supply squeeze if the US imposed harsher sanctions on Iran. Analysts argue that 300,000 barrels a day can be at risk if diplomatic tensions escalate between the US and Iran.

In 2015, the Iran agreement lifted economic sanctions on Iran and in exchange the oil-producing country would limit its nuclear program and allow inspections of its atomic facilities. However, Trump finds the agreement too light and is widely expected to impose harsher sanctions on Iran.

On the bigger picture, oil is trending higher because of several factors. The OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC agreement to cut production by 1.8 million barrels a day is artificially cutting oil supply. The deal entered into effect on January 1, 2017, and is set to last until the end of this year. Also underpinning prices is a higher global oil demand which is forecast to grow to 99.3 million barrels a day in 2018 from 97.8 million barrel a day the year earlier. 

Crude oil WTI 4-hour chart

The trend is bullish and resistances are seen at 70.83 (recent high) and at the 71.00 psychological level. To the downside, the 69.55 previous swing high and the 69.00 psychological level should act as support.