Daily Analysis – Oil Rises Amidst Middle East Tensions

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Daily Analysis – Oil Rises Amidst Middle East Tensions

Summary: Oil rose to over $115 a barrel on Friday as Middle East tensions soared. Euro also rose from its recent downfall after Christine Lagarde’s comments at the IMF’s annual meeting in Tokyo. Wall Street on the other hand rose early on the back of a positive unemployment report and later faded down to almost where it started as the day progressed.

The Euro finally rose after four days yesterday as the IMF suggested that the struggling European economies should be given some more time to cut their budget deficits. The oil prices also gained considerably in view of the scaling tensions between Turkey and Syria over a plane carrying ammunitions.

In the west the U.S. shares soared after the country’s labour market indicated signs of improvement in its unemployment report. However, the celebration was short lived, with the joblessness levels dropping lower.

The Eurozone Crisis

In Forex, the Euro showed some significant improvement. It recovered from its week long low run and came back strongly to end the day up at 0.4%. In another turn of events, Christine Lagarde commented on the European economic turmoil by saying that both Greece and Spain need to be given more time to reduce budget deficits owing to the delicate situation in the European nations. The Spanish bonds yielded lower than expected blotting out the earlier rise to a crucial 6% mark owing to Wednesday’s downgrade on the country’s credit worthiness by S&P 500.

The S&P 500 had severely cut Spain’s ratings from +BBB to –BBB just a level greater than the junk status. S&P signalled that the fear of an intense recession and the lack of response from the European policy makers to the current financial crisis had made Spain highly vulnerable.

The bad news from Europe petrified the investors initially. But they were all soon relieved as the credit downgrade meant that Spain would move quickly to request for a bailout from the ECB. The ten-year Spanish yields also declined to 5.4 basis points yesterday having hit 5.96% earlier, which was the highest for the day. The stock markets expect Spain to be among the first of the Europe’s biggest economies to request for a bailout from the ECB.

In another series of events, beverage giant Coca Cola has shifted its base from Greece to Switzerland and its market to London. The event was seen as another blow to the already suffering Greek economy, which is one of the nations surviving on the ECB’s bailout package. If this was not enough the unemployment percentage in Greece rose to 25% which has made matters even worse for the cash trapped Greek economy.

The only positive thing to report from the European markets was the gain of the MSCI global index by 0.4%.

The Middle East tension and the Wall Street flat-line

The benchmark 10-year U.S. Treasury note soared higher at 2/32, yielding 1.673%. The stock market rose initially after the unemployment report was released. The aid for unemployment had decreased to the lowest level since February of 2008 when the financial crisis had just begun. But the market made it way back to where it started as Apple Inc dropped considerably in the noon and the market ended the day slightly lower than where it had started. Dow Jones slipped by 18.58 points to 13,326.39. The NASDAQ also fell 2.40 points to 3,049.38. While the S&P 500 rose slightly by 0.28 points at 1,432.84.

Apple’s shares fell by 2% as it lost a preliminary injunction on the sale of Samsung’s Galaxy Nexus Smartphone in a U.S. appeals court. Sprint Nextel however rose to 14.2% in the NYSE after rumours made rounds about a probable sale was in the making.

The Middle East tension involving Turkey and Syria propelled the Brent crude by $1.38 to gain $115.71 per barrel. The U.S. crude futures cleared up at $92.07. The price was also influenced by the maintenance curbs on the North Sea.

Binary Options for today’s markets

The market trend for the day is a mixed bag, with stocks maintaining a flat-line, oil prices soaring and the Forex also putting up a slightly better show (Euro gained after several months).

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The market might just continue the same way for a few days to come. The stock markets however have nothing more in store to soar. The stock prices are likely to go bearish at the end of the week. The oil and commodities however are all set to go bullish with the middle tensions fuelling the rise in oil price, the new regulations by the CFTC and the ICE and CME scrambling to convert all their energy swaps to futures the might just grab the attention of the investors.

The binary options strategies would be to bank in favour of a bearish market in stocks and a bullish market for oil and other commodities.

Oil Rises Amid Middle East Tensions, Shrinking Crude Stockpiles

Oil rose for a third day amid flaring geopolitical tensions in the Middle East and expectations for a decline in U.S. crude stockpiles.

Futures in New York climbed as much as 1 percent, set for the highest close since late 2020. A measure of oil volatility rose the most in two weeks amid concern that President Donald Trump will reimpose sanctions on Iran, while friction between the Islamic Republic and fellow OPEC member Saudi Arabia increased with further violence in Yemen.

Oil has rallied this month as the Organization of Petroleum Exporting Countries and its allies conclude they have all but wiped out a global crude surplus, while Iran signaled the group can end output cuts if prices continue to rise. Still, with production in the U.S. at a record, investors are wary that expanding volumes from shale producers could thwart OPEC’s efforts to eliminate the glut.

“Oil bulls refuse to budge,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. Tuesday’s gain shows attention is “still firmly on geopolitics.”

West Texas Intermediate crude for June delivery rose as much as 69 cents to $69.33 a barrel on the New York Mercantile Exchange, and traded at $68.83 as of 10:18 a.m. London time. Total volume traded was about 12 percent above the 100-day average.

Brent crude for June delivery advanced 5 cents to $74.76 a barrel on the London-based ICE Futures Europe exchange after climbing 0.9 percent on Monday. The global benchmark crude traded at a $5.92 premium to June WTI after closing at $6.07 on Monday, the highest premium in more than three months.

Futures for September delivery on the Shanghai International Energy Exchange traded up 1.7 percent at 447.3 yuan a barrel. The contract closed up 0.7 percent at 439.7 yuan on Monday.

The Cboe/Nymex oil volatility index jumped 3.9 percent on Monday, posting its biggest gain since April 10. Saudi Arabia intercepted ballistic missiles fired by Iran-backed Houthis in Yemen, while a kingdom-led coalition killed a senior leader of the rebel group.

In the U.S., crude stockpiles probably fell for a second week last week, losing 2.25 million barrels, according to a Bloomberg analyst survey ahead of government data on Wednesday. Inventories in the nation’s oil-storage hub of Cushing, Oklahoma, may have dropped by 150,000 barrels in the period, a separate survey showed.

As well as Mideast tensions and U.S. stockpiles, America’s recent softening stance against China and Russia is also boosting sentiment among oil investors, Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. Treasury Secretary Steven Mnuchin is considering lifting sanctions against Russian metal giant United Co. Rusal.

Other oil-market news:

The Bloomberg Dollar Spot Index was little changed after rising to the highest in more than three months on Monday. China’s crude imports from Russia increased 24 percent year-on-year in March, while purchases of Saudi Arabian crude rose 1.2 percent, according to data released by the nation’s General Administration of Customs on Tuesday. Saudi Aramco plans to trade as much as 6 million barrels a day, a jump in volume that would put it in the top tier of companies that buy and sell crude and refined products. Exxon Mobil Corp., a cornerstone of fund managers’ portfolios alongside the biggest names in corporate America, has fallen to ninth-largest company on the S&P 500 Index after leading the measure a decade ago.

Oil Prices Rise Amid Tensions in Middle East

Investing.com – Oil prices extended gains on Thursday in Asia amid tensions in the Middle East linked to stealth attacks on Saudi oil tankers and pipelines.

U.S. Crude Oil WTI Futures rose 0.7% to $62.45 by 12:20 AM ET (04:20 GMT). International Brent Oil Futures gained 0.6% to $72.22.

Intensifying tensions in the Middle East were cited as pushing oil prices higher.

“(Middle East tensions have intensified), with the U.S. ready to apply pressure in Tehran and evacuating its embassy in Iraq due to security concerns,” said Alfonso Esparza, senior market analyst at OANDA, at a Reuters report.

Meanwhile, the Energy Information Administration reported a surprise increase in U.S. stockpiles, but the inventory data was largely overshadowed by the situation in Middle East.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 5.4 million barrels last week, versus expectations for a decline of 800,000 barrels, the EIA said Wednesday. In the previous week, crude inventories fell by almost 4 million barrels.

“While draws were expected across the whole complex, we saw builds almost across everywhere,” said Tariq Zahir, who runs New York-focused oil fund Tyche Capital Advisors.

“We had an eye-opening 5.4-million-barrel build in crude where a draw was expected of 1.1 million. This 6-million-barrel surprise should keep a lid on prices. (That’s) coupled with the fact that IEA also reported a revision down in demand for crude and the large Cushing build, which was also a surprise.”

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