The bulls are off and running today because there is a bevy of bullish headlines including optimism over a U.S./Chinese trade deal and a missile attack on an Iranian oil tanker.
President Donald Trump tweeted positive news on the U.S. and Chinese trade negotiation this morning saying “Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!”
This and other reports by Reuters and The New York Times indicate that the U.S. and Chinese could agree to a mini deal that would include a currency agreement and a pause on the upcoming tariff schedule which is set to take effect on October 15th. The equity and oil markets welcomed this news with open arms this morning with the Dow Jones Industrial Average trading higher by 1.6% and WTI crude trading higher by $0.78 to $54.33/barrel.
Oil is also receiving a boost in prices due to an Iranian oil tanker supposedly being attacked by missiles 60 miles off the coast of Saudi Arabia overnight. This report, if confirmed, will certainly ratchet up Middle East tensions between Iran and Saudi Arabia which have cooled down since the attack last month on the Saudi Arabian oil field which the United States, UK, France, and Germany blamed Iran for. This tension comes on the heels of the Turkish invasion of the Kurdish forces in Syria earlier this week after the U.S. announced it was withdrawing troops from the area. The Kurds have been an ally with the U.S. and NATO helping to combat against Islamic State militants. The U.S. and NATO may be forced to react if Turkey (a NATO member) does not halt its attacks. Therefore, the escalation in Middle East tensions may be reintroducing the geopolitical risk premium in oil prices if it persists.
November ULSD currently trades higher by $0.0408 to $1.9616/gallon and RBOB is up by $0.0096 to $1.6329/gallon.