Netanyahu sparks oil rally with Iran comments

Crude oil is trading with what Saxo Bank head of commodity strategy Ole Hansen terms a non-fundamental premium in the wake of Israeli prime minister Benjamin Netanyahu's forceful condemnation of Iran ahead of the US' May 12 deadline to extend the Iranian nuclear deal.

Netanyahu's claims are based on documents relating to a 1999-2003 operation in Iran that, while it falls outside the parameters of the current deal, allegedly demonstrates that Tehran is acting in bad faith with regard to its nuclear programme.

On the fundamentals front, meanwhile, Hansen reports that the latest Energy Information Administration data show US oil production having risen by 260,000 barrels/day in February to a total of 10.26 million b/d and 11.5m b/d forecasted for year-end.

Beyond crude, Hansen reports that gold, silver, and copper are on the defensive with XAUUSD potentially heading for a test of support at $1,300-1,305/oz; in Saxo technical analyst Kim Cramer Larsson's view, gold prices are likely to bounce from support at these levels.

Behind the weakness in gold is the dollar's continued rally, which Saxo Bank head of forex strategy John Hardy says remains in full effect. Looking at the EURUSD chart, both Hardy and Larsson feel that the pair is likely headed for a test of the 200-day moving average just above 1.20, with Hardy stating that failure here could see the euro drop down to 1.1586.