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Iran’s presence at Davos could weigh on crude prices


Iran may have been dis-invited from peace talks by the United Nations, but the famously neutral Swiss seem to be more inviting. As the financial and political carnival that is the World Economic Forum in Davos, Switzerland continues this week, attention will eventually turn from Bono and meditation to more practical matters such as global energy prices and Iran’s effort to rejoin the global trading community after years of sanctions.

Towards the latter end, Iranian Oil Minister Bijan Zanganeh is holding face-to-face meetings with representatives of major energy companies in hopes of securing outside investment to help modernize Iran’s production capabilities.

In the attached clip Bill Baruch of iiTrader.com says the mere fact of Iranian officials showing up in Davos has significant implications. “As oil spikes when geopolitical tension is seen, this should inverse that and one of the bearish points in the market right now will escalate.”

WTI Crude (the U.S. benchmark) has spiked by more than $3 in the last week, pushing the price straight into stiff resistance as Baruch sees it. “You’ve got the 200 day moving average at about $96.05 and the 50-day moving average at about $95.85,” he says. WTI is poking its head above those levels but it’s going to take a substantial push higher to convince technicians in the trading pits that the move is real.

“This is just a dead cat bounce bringing the opportunity to sell,” Baruch concludes. Unless Iran shows up in Davos looking for a fight, or the Federal Reserve stuns the world by introducing QE4, the smart money is betting the price of WTI crude sees the $80s before it hits $100 again.