Oil markets face a trifecta of risk

by Chris Becker

Oil prices faced a trifecta of risk events overnight, sending the WTI and Brent contracts below their recent highs and shaking confidence that the current bear market rally can be sustained for the rest of the calendar year.

First of all, the ongoing political domestic crisis in major producer Venezuela, where Goldman Sachs overnight in a report stated that new US sanctions would have minimal upside impact on the price of oil. The country with the world’s biggest oil reserves remains in crisis that could spread across the region, but the US sanctions do not yet add up to an embargo, which would hurt domestic US crude buyers. The Vampire Squid has some tentacles over Venezuela with recent sovereign bond purchases, but the market listened nonetheless.