Forex Today: WTI Crude Oil $78 as Hormuz Traffic Stays Stopped

Despite the US offer of insurance and naval escorts, putting upwards pressure on Crude Oil which just tested its 7-month high price.

1. The US/Israel war against Iran is continuing to rage. It is clear that things are going increasingly well for the US/Israeli side. It is also clear that Iran has focused much of its war activity on hitting countries nearby with US bases such as the UAE, Qatar, Kuwait, and Saudi Arabia where Iran can probably do more damage more easily than in Israel, which continues to take rapidly decreasing fire from Iran. The aspect of the war that is most disrupting markets is the bottleneck that Iran has succeeded in placing over the Strait of Hormuz. Traffic has now reportedly completely halted, and major insurers are telling their tankers not to cross. Iran claims it has complete control the Strait while the US states that it will escort oil tankers through. There has also been some minor damage to oil infrastructure on both sides of the way. President Trump has promised to insure oil tankers wishing to pass through the Strait and has also promised to send naval escorts to defend crossings. However, this has not sent the price down in any sustainable way. Here's how each of several key assets are behaving:
   1. WTI Crude Oil - retested the 7-month high $78 late in the Asian session. It is very possible that the price may continue to rise and even make a new 7-month high later. However, this is likely to be determined by whatever happens at the Strait and also whether there is any more damage to oil infrastructure. If Trump makes good on his threat to open the Strait of Hormuz, the price will fall dramatically.
   2. Gasoline - futures in the US again advanced to a new 10-month high, and the price action is looking bullish over the short-term. President Trump will be sensitive to domestic Gasoline prices and will do what he can to keep energy production out of the war, although opening the Strait may be a problem.
   3. Gold - very subdued after its sudden strong drop earlier this week. Gold is looking much weaker than it did last week.
   4. S&P 500 Index - choppy and making a bearish top, with a clear neckline just waiting for a sliding breakdown to happen. Technically, I could see a sudden sharp fall in the US stock market which would take this index back to its 200-day moving average.
2. Following Qatar's closure of its LNG (liquid natural gas) production earlier this week after successful Iranian attacks on its key natural gas facilities, this is pushing up the price in the Middle East and Europe. The impact in Europe is continuing to put pressure on the Euro in the Forex market.
3. Bitcoin finally made a breakout from its dominant range of the past several weeks, with the move a bullish one giving a sustained breakout above the former resistance level at $71,762. The price now has room to rise to $81,203 but could run into resistance below that starting at about $76,500.
4. In the Forex market, the strongest major currency since today's Tokyo open has been the Japanese Yen, while the weakest has been the Australian Dollar. This puts the key risk barometer Forex cross, the AUD/JPY, in view.
5. Yesterday's US data with the ADP Non-Farms and ISM Services PMI came in slightly better than expected, but this had no real impact.
6. There will be a release of Unemployment Claims data in the USA later today.