Brent and West Texas Intermediate oil prices surged more than 3% overnight, following the US’s announcement of not extending the waiver on Iranian oil sanctions expiring in early May.

This points to a big drop in the supply side, which boosts the commodity’s price. Iran’s daily oil output amounts to 1.3 million barrels, according to latest figures in end March.

The sustainability of oil’s rally, however, depends on Saudi and other OPEC members’ actions to increase oil supply in the month to come. President Trump tweeted, ‘Saudi Arabia and others in OPEC will more than make up the oil flow difference in our now full sanctions on Iranian oil’. Sources according to Bloomberg said OPEC can increase output by 1.5 million barrels a day within a short period.

Technically, Brent oil has broken out above a key resistance at US$72.5 and last traded at US$74.46. It’s overall trend in the daily chart remains bullish, as 10-Day SMA and SuperTrend (10,2) both sloped upwards. Momentum indicators RSI and DMI, however, have shown signs of overbought. Support and resistance level can be found at US$ 72.5 and US$78.0 respectively.

Strong oil prices will support Singapore’s offshore & marine sector, namely Keppel Corp, Sembcorp Marine, Sembcorp Industrial etc.

In the currency market, JPY, GBP and USD are leading the gain among major pairs in the Asian opening.

US equities were mixed overnight, with the energy (+2.05%) sector doing the heavy lifting of the overall market. Real Estate (-1.05%), materials (-0.67%) and industrials (-0.32%) continued to trail the benchmark.

This week’s focus will be on big earnings from US Technology companies – Twitter (23th Apr), Facebook (25th Apr), Tesla (25th Apr), Microsoft (25th Apr) and Amazon (26th Apr).

Crude Oil Brent - Cash