Shooting a DRONE of US by Iran caused Crude Oil Price boom

Crude Climbs by Most This Year as Iran Shoots Down U.S. Drone

Oil jumped the most this year as attacks by Iran and its proxies in the sky and on sea and land prompted U.S. President Donald Trump to warn the Islamic Republic it made “a very big mistake.”

Futures climbed 5.4% in New York on Thursday after Iran shot down an American drone just a week after two tankers were targeted in the region. Meanwhile, Iran-backed Houthi rebels in Yemen said they hit a Saudi Arabian power plant with a cruise missile, at least the third such attack on the kingdom’s infrastructure in a week.

Trump appeared to downplay the Iranian drone downing, saying a “loose and stupid” individual -- rather than Iran’s top leaders -- may have been culpable.

Crude was also boosted by an equity rally after the U.S. Federal Reserve signalled it’s ready to lower interest rates for the first time since 2008.

After slipping into a bear market earlier this month, U.S. oil futures have surged more than 10% since the middle of last week, as America and Saudi Arabia blamed Iran for a spate of attacks while the Trump administration tightened sanctions on the OPEC member. The word that Trump and Chinese President Xi Jinping are set to resume trade talks at the G-20 summit in Japan have also brightened sentiment about global growth.

“The Iran conflict isn’t going away any time soon,” said Michael Hiley, head of over-the-counter energy trading at LPS Futures in New York. “If you combine that with Trump and Xi making nice -- they are at least saying the right things -- then that’s certainly going to prop up” the oil market.

West Texas Intermediate for July delivery, which expires Thursday, rose $2.89 to settle at $56.65 a barrel on the New York Mercantile Exchange, the biggest gain since Dec. 26. The more-active August contract advanced 5.7% to close at $57.07 a barrel.

Brent for August climbed $2.63 to end the session at $64.45 a barrel on London’s ICE Futures Europe Exchange. The global benchmark crude traded at a $7.38 premium to WTI for the same month.

Iran said the craft it shot down was spying and stated it would defend its airspace and maritime boundaries “with all our might.” Iran and the U.S. continue to dispute whether the U.S. Navy drone was over international or Iranian waters when it was shot down near the entrance to the Persian Gulf.

Speculative traders who’d turned against crude recently are ready to pile back in, said LPS’s Hiley. “Certainly there are some buying bullets out there; there’s some dry powder,” he said. “You can’t be short in this market.” 
Source: https://www.bloomberg.com/news/articles/2019-06-19/oil-finds-support-on-tighter-u-s-supplies-robust-gas-demand