U.S. crude prices have retreated in Wednesday trade. Currently, U.S. crude is trading at $61.57, down $1.14 or 1.83%. Brent crude oil futures are trading at $67.36, down $0.88 or 1.32%.
The markets remain volatile after a U.S. drone attack killed a top Iranian general on Friday. This has raised tensions in the Persian Gulf and throughout the Middle East. On Wednesday, Iran launched missile attacks at several U.S. bases in Iraq. It remains to be seen if U.S. President Trump will retaliate, or will we see a de-escalation of the situation.
With risk apprehension soaring, Brent crude prices briefly pushed above $70 on Monday, a level last seen in May 2019. Although crude prices have retracted since the spike on Monday, some analysts have raised the scenario of oil prices hitting $100 a barrel. There are fears that Iran could close the Straits of Hormuz, a narrow waterway through which 15 percent of the world’s oil passes through. If Iran does shut the waterway, it would severely disrupt oil exports and send crude to sky-high levels.
Oil prices are showing swings in both directions, so what can traders expect next? According to David Bahnsen, chief investment officer of The Bahnsen Group, “it will take some time to sort through the news to have a better feel for what it could mean to markets”. .
Next – ADP Nonfarm Payrolls
Investors will be treated to a host of employment releases this week, which are important gauges of the health of the U.S. economy and could have an impact on oil prices. Later on Wednesday, we’ll get a look at the ADP nonfarm payrolls, which dropped to 67 thousand in November. Analysts are expecting a strong turnaround in the December release, with an estimate of 160 thousand. On Friday, the U.S. releases official nonfarm payrolls, which is forecast to fall to 150 thousand, down from 266 thousand a month earlier. Wage growth is expected to rise to 0.3%, up from 0.2% in November. .
With U.S. crude losing ground on Wednesday, the line of 62.25 is under strong pressure in support. This is followed by support at 61.50. On the upside, we find resistance at 63.25.
This article was originally posted on FX Empire
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