By Pritam Kumar PatnaikCrude oil prices continued to move higher this week. The price action for ICE Brent August futures saw a movement from a low of $73.74 a barrel to high of $78.42 a barrel during the week. Similarly, NYMEX Crude August futures saw a movement from a low of $67.72 a barrel to high of $74.03 a barrel for the week.Prices started on the backfoot as investors prepared for an extra 1 million barrels per day (bpd) of oil to hit markets after Opec agreed to raise production and as US equity markets slipped on trade war fears.However, after the initial weakness, crude prices started recovering and by the end of the week, they ended with solid gains.So why did the rally happen? Traders bought oil as they feared Washington’s policy of stopping allies from purchasing Iranian crude would constrain global supplies.Reuters reported that the US has told countries to cut all imports of Iranian oil from November and is unlikely to offer any exemptions, as the Trump administration ramps up pressure on allies to cut off funding to Iran.In May, US President Donald Trump said his administration was withdrawing from the ‘defective’ nuclear deal agreed between Iran and six world powers in July 2015, aimed at curbing Tehran’s nuclear capabilities in exchange for the lifting of some sanctions, and ordered the re-imposition of US sanctions against Tehran that were suspended under the accord.Iran’s seaborne crude exports fell to about 1.93 million bpd in June from 2.38 million bpd in May and 2.58 million bpd in April, based on Thomson Reuters data.The US official specifically cited India and China as countries that would have to stop accepting Iranian imports, though officials have not yet spoken with those countries.India imports large quantities of oil from Iran, though the country has suggested it would comply with Washington; Beijing, meanwhile, has not committed to an agreement to stop buying Iranian oil, and rising trade tensions with the US may make such an agreement less likely.Oil also rallied this on the back of disruptions from Canada and Libya. Disruptions from Canada could affect the supply of crude throughout July after the outage at Syncrude Canada’s 360,000 bpd oil sands facility near Fort McMurray, Alberta. A spokeswoman confirmed will remain offline through July.In addition, a power struggle among the two parallel Libyan national oil companies created uncertainty on the country’s export ability.The announcement for transferring operations of eastern ports to NOC in Benghazi follows military action by the eastern Libyan National Army (LNA) under the command of Khalifa Haftar to retake Ras Lanuf and Es Sider ports, which are also in the east and remain closed.Those two closures have disrupted oil flows amounting to about 450,000 barrels per day (bpd), cutting by about half Libya’s total output of about 1 million bpd earlier this year.Oil prices were also supported after data from Energy Information Administration showed that US commercial crude oil inventories dropped by almost 10 million barrels in the week to June 22, to 416.64 million barrels. The draw in US inventories was also due to high exports of almost 3 million bpd, coupled with domestic refinery activity hitting a utilisation rate of 97.5 per cent, the highest in more than a decade.Looking ahead, prices could continue to see more upside move in the next week or so supported by unplanned supply disruptions from Canada to Libya and Venezuela. Additionally, Iran problem may not fade away quickly and could continue to support prices.However, not all indicators point toward an ever-tightening market. US crude production is approaching 11 million barrels per day (bpd), and Saudi Arabia and Russia are expected to match that in coming months as well.At the same time, oil prices could be influenced by weak global factors after investors may be worried that trade friction between the United States and other major economies could escalate and could prompt investors to exit aggressive positions in high risk assets like crude.This was reinforced by CFTC data for last which showed that hedge funds and other money managers cut their net long US crude futures and options positions in the week to June 19. The speculator group cut its combined futures and options position in New York and London by 9,344 contracts to 340,679 during the period.Technically, MCX Crude July contract witnessed sharp rise in last week and moved higher from Rs 4,627 to the high of Rs 5,109 till now. Since June 2016 prices have been intact in upward moving channel and as of now it has approached close towards upper channel resistance. As per this channel, resistance zone is placed at Rs 5,180-5,200 level. Hence price action near this zone will be important to watch. Weekly RSI has reached towards 70 zone and hence some profit booking can be possible in coming week. We can expect prices to trade in broader range of Rs 4,800 and Rs 5,180 levels. Volumes have been decreasing from last three sessions which has arrived at 14,0322 contracts from 17,0431 contracts. Hence, sideways action is possible in the coming days.Internationally, Brent Crude Futures, after the rally from $72.70 to $78 levels, prices are trading in overbought state and hence some sideways action is possible in coming week.We can expect prices to trade in the range of $76 and $78 for now. One can use any dips towards $76 as buying opportunity. On upside $78.80 is the important resistance to watch.(Pritam Kumar Patnaik of Reliance Commodities analyses outlook for various commodities on weekends, Views are his own)