Crude Oil: Good news for many, bad news for some

Iran has reached an agreement with 6 world powers to limit its nuclear program in return for the lifting of sanctions has been reached at talks in Vienna (here). The lifting of trade sanction would allow Iran - the 6th largest oil producer- to export crude oil again.

Diagram: World 's largest oil producer in 2014 (Source: US Energy Information Administration)

The deal, which was expected by the market, has caused WTIC to drop since the beginning of the month. WTIC's immediate support is at USD50.00. As at 3.30pm, WTIC was trading at USD50.99.


Chart 1: WTIC's daily chart as at July 13, 2015 (Source: Stockcharts)

The drop in crude oil prices has to some extent affected the sentiment for CPO. That commodity, which has peaked at RM2350 in early June, has continued to decline in the past 2 weeks. At the rate it is sliding, CPO may revisit its low at RM2100 soon.


 Chart 2: CPO's weekly chart as at July 14, 2015_3.00pm (Source: ifs.marketcenter)

The drop in crude oil prices and the weakening of the CPO prices would put a dampener on the price of Oil & Gas stocks as well as plantation stocks.