There was a strong push higher in crude prices yesterday after a couple of events which threaten to heighten geopolitical risks in the Middle East. First, US president Trump took to Twitter to warn Russia of a US missile strike in Syria (A sense of irony doesn’t seem to be lost on Trump as the message totally contradicts a previous tweet of his own from back in 2013 where he directly questioned the Obama administration as to why the US were broadcasting when they would attack Syria) before reports of Saudi Arabia intercepting a ballistic missile fired by pro-Iranian Yemeni rebels sent the oil price sharply higher.
Middle East developments outweigh inventory data
Brent crude, an international benchmark for the oil price, spiked almost $2 in 30 minutes Wednesday afternoon as traders scrambled to buy the market following the Saudi reports. The news hit the wires just a few minutes after the weekly DOE inventories had shown a far higher than expected rise in US stockpiles, but this has a relatively weak impact on price at the moment compared to the Syrian situation. From a technical point of view the market has now made a concerted break higher and with little by the way of swing resistance seen overhead there could be a continued push to the upside ahead.
Stocks remain resolute
It wasn’t just the oil price where the Syria news could be felt in the markets with gold also surging higher on safe-haven flows. Given the understandable reaction seen in oil and gold it is perhaps a little surprising that stocks weren’t hit, with equities on the whole remaining fairly resolute. There has been a near constant negative news flow as far as stocks are concerned in recent weeks and despite this they have held firm. The stage may well now be set for a push higher into month-end as the best half of the year for equities comes to an end and the 'sell-in-May' maxim comes into effect.