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Oil Prices Continue Higher; Is the Bottom In?

We had been mentioning in our last couple of forecasts this week that even though the oil prices closed at their lows last week and looked as though all was lost as far as oil was concerned, there were some signs of life and a turnaround in the oil prices in the short term. That is the reason why we had raised doubts on whether the oil prices have indeed reached a bottom and that it was time for the prices to move steadily higher and thats what we have been seeing since the beginning of the week as the oil prices have recovered from their lows in the low $42 region and now trade confidently above $45 as of this writing.

Oil Prices Show Sings of Turn Around

In this move, the oil bulls have been helped by improving production and inventory data as far as the bulls are concerned and they have also been helped by the conflict and the tension in the Middle East which has led to a bout of uncertainty in the oil markets as far as production is concerned. There is a general belief that the oil production is likely to get affected if and when the tensions escalate and this has helped the oil prices to move higher. Also, some of the parties involved in the tension in the Middle East would really like the oil prices to be way higher than where it is now and for them, this tension could be a tool to help them achieve what they want, which is to push the prices higher. This was the basis for us to believe that we might have seen the bottom of the oil prices for now and even if the oil prices turn lower in the short term, the previous range lows at around $42.3 should be a good place to go long in oil.

Oil Hourly
Oil Hourly

Gold continues to consolidate and trade within a tight range, generally unaffected by the speeches from the various central bank leaders which has been pushing and pulling the various currencies in different directions.The gold bulls have not been able to utilise the weakness in the dollar to push the gold prices higher and hence the prices have been steady at best. There is likely to be a lot of selling as the prices approach 1260 and it remains to be seen what happens there.

Silver prices also continue to recover and move steadily higher as the global risks and uncertainties increase and the investors seek to push more and more funds into safe assets. This has seen the prices climb higher and it trades just below $17 as of this writing and is expected to consolidate in the short term.

This article was originally posted on FX Empire

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