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Crude is bearish after weekend talks over Iran's nuclear
program |
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| Forecast |
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| Analysis |
Crude oil fell at the beginning of the week after Iran
and the West completed long negotiations on the weekend which
came with no notable results except determine a second round
of negotiations, and this opened the door for the commodity
to continue its downside wave. Crude opened today's session
at $102.72 and fell to reach so far a low of $101.84 and is
currently trading negatively around 101.95 a barrel.
Negotiations between Iran and the five permanent members in
the UN plus Germany did not came with any effective solution
but both parties agreed to have a second round of discussions
on May 23rd. Although, investors remained concerned over the
Iranian oil supplies and a war possibility especially that
Israel didn't rule out the military intervention. As we can
see dear reader, there is nothing clear so far weather there
will be any military action on Iran, or the country would
step back on its nuclear program, the situation remained
unclear at the current time. However, just agreeing on a
second round of talks considered to be positive and eased the
pressure on crude supplies. This result is been able to push
crude to the downside helped as well by pessimism in Europe
which pulled oil prices to the downside, as European
countries are facing expensive borrowing costs especially
Spain and Italy raising the fear level over the Euro outlook.
Expensive borrowing costs in Europe trigger more fears in the
region, as it reflect the market's worries and doubts over
the ability of these countries, who face higher borrowing
costs, to get out from the debt hole and return to grow
economically. This high uncertainty in global financial
markets urged investors to buy U.S. dollar as a safe haven,
which pushed the currency higher at the beginning of the week
after Friday's huge gains. The USDIX opened today's session
at 79.90 to reach so far a high of 80.14 and is trying now to
achieve more gains. This stronger dollar is a main factor
that provides a bearish momentum for crude along with other
factors that we talked about, but this does not negate that
we would see heavy volatility ahead of U.S. retail sales
which is expected to show a sharp drop in sales during
March. |
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.