U.S. crude prices are slightly lower at the start of the week. In Monday’s Asian session, WTI futures for October delivery are trading at $58.25, down 0.44% on the day.
Crude Prices Settle Below $60 Level
Investors were treated to a roller-coaster ride last week, as crude prices jumped 12.8% on Monday, only to retract by 5.0% the next day. This was a direct reaction to an attack on a Saudi oil refinery, which reduced Saudi oil production by some 50%. Oil prices soared as high as 63.37, but quickly fell back below the 60.00 level. The spike in crude highlights the vulnerability of oil facilities in the Middle East, and investors remain wary as tensions remain high between Iran on the one hand, and the U.S. and its allies on the other. Any negative developments, such as additional attacks on oil installations, could quickly cause investor panic and send oil prices soaring once again.
At the same time, the headlines predicting that crude will hit $100 seem somewhat exaggerated, in my view, unless there a major armed conflict breaks out in the Persian Gulf. Traders should keep in mind that the 100 level has proved to be quite resilient, having held firm since June 2014.
Investors Eye Crude Inventories, GDP
With the recent volatility in crude prices, this week’s crude inventory report will be closely watched. The Energy Information Administration (EIA) report has shown declines in recent weeks, but last week surprised the markets with a surplus of 1.1 million barrels. Analysts had predicted a drawdown of 2.1 million. Another unexpected result from this week’s EIA report could affect the direction of crude prices.
This week’s other key event to follow is Final GDP for the second quarter. In the second estimate, the economy grew by 2.0%. Any change in this reading in the final estimate could affect investor sentiment and impact on U.S. crude prices. I do not expect any significant movement from crude before Wednesday, when we’ll get a look at the EIA inventory report. The GDP release follows on Thursday.
This article was originally posted on FX Empire
More From FXEMPIRE:
- EUR/USD Price Forecast – Euro breaks large number
- Natural Gas Price Forecast – Natural gas markets finds support
- Gold Price Prediction – Soft EU Data and Positive Momentum Point to Higher Gold Prices
- Gold Price Forecast – Caution is Warranted
- USD/JPY Price Forecast – US dollar testing support
- Brexit and the Pound: Plenty of Downside Left