The oil sellers can't maintain traction

<p>Venezuela returning to the oil market was something of a 'sell the fact' trade. It's been rumored for weeks and, if anything, there's some disappointment because the sanctions relief is only scheduled or 6 months. The downside is that Venezuela could have been anticipating this for awhile and stockpiling oil to sell, unleashing it now. If so, the 200k bpd anticipated could be significantly larger, at least initially.</p><p>In any case, I think a strong global economy is the main driver for oil and easing gasoline cracks are definitely helping for demand as well.</p><p>The Middle East is certainly in the price as well. There are two lines of thinking:</p><p>1) When Israel invades Gaza, it could set of a cascading series of events. Something is probably going to happen in Lebanon as well; could it get all the way to Iran? Possibly.</p><p>2) There was hope for some kind of grand bargain with Saudi Arabia, the US and Israel where the Saudis would recognize Israel in exchange for security guarantees. There was some thinking that pumping more oil would come with that (though the Saudis always denied it and I'm inclined to believe them). In any case, that deal is very likely on the back burner now and won't be able to be rekindled before the US election.</p><p>Skip ahead and we will get a resolution on Item #1 in days while #2 is more-lasting. That's a good reason for more of a sustained bid in oil, but it depends on how much of a short-term bid there is for security of supply.</p><p>As for the chart, a rise above yesterday's high would continue to clear the way for a retest of $95. The sellers were in charger earlier but they folded in US trading.</p><p>Also of note for oil traders, next week's EIA report is delayed by a week.</p>

This article was written by Adam Button at www.forexlive.com.