Oil Continues to Rise on Syria Attack and so does Dollar
By: Eddy Peng Apr 10, 2017
Crude capped a second weekly gain after U.S. missile strikes against Syria by President Donald Trump’s administration while the dollar rose as investors dismissed the weaker-than-expected jobs report as not enough to derail a strong economy or the outlook for rising interest rates. For the week, crude closed up about 3 percent, and traded close at 52.005 on Friday, with breaking out to the MA60.
Investors’ concerns over the financial market and geopolitical uncertainty in the Middle were raised by the missile striking action in Syria’s six-year-old civil war, and thus hit assets considered higher risk such as equity. However, such military action by U.S. army induced gold’s chasing by investors, which is considered as a safe-haven asset, climbed to a five-month high before easing and yields on risk-averse benchmark U.S. Treasuries briefly slid to four-month lows.
Crude’s gains partially because of Syrian output’s slump during the ongoing conflict. Production of petroleum and other liquids dropped to about 35,000 barrels a day in 2016, making it the 66th-biggest producer, according to the Energy Information Administration. It pumped an average 400,000 barrels a day of oil between 2008 and 2010.
A jobs report released last week seen as out of step with the labour market kept alive expectations the Federal Reserve will raise interest rates twice more in 2017 as the unemployment rate last month declined to 4.5 percent from 4.7 percent in February. “As long as we see the unemployment rate decline, we will see more rate hikes,” said Cathy Barrera, chief economic adviser at ZipRecuiter in New York.
Nonfarm payrolls rose by 98,000 jobs last month, revealing rising employment and potential inflation pressure, will be considered as another driver of potential rate hike.
U.S. index is currently located at 101.180, breaking the MA60 after experiencing moderate gains in the past two weeks, when the technical daily chart of which is similar with that of crude. A key resistance can be found above the current position of trading, found at 102.27. Moreover, another resistance that might first stop its increase was found at the upper trendline in blue. If it cannot break the upper trendline, it may fluctuate at the range of two trendline.
Chart 1: USD Index Daily
Likewise, the price of crude oil is also facing a key resistance found at $54.548 after breaking the lower resistance found at $50.363. Between these two resistances, intensive trading area could be found and may lead to a high volume of selling since investors are waiting to the rally of prices. Thereby for the technical perspective, the breakout of upper resistance is not likely to occur shortly, instead, it tends to revert and wait to the next move of breakout.
Chart 2: WITCOUSD Daily
However, for the long-term period we are positive to the further rise if we look at the historical data of weekly chart of crude as it is now trading at the relative bottom level. The MA60 and MA200 are narrowing with prices approaching the MA200, normally revealing its potential upward breakout amid the oil production cut by OPEC.
Chart 3: WITCOUSD Weekly
Thank you for inquiry ACY.
Your application has been received, and we will arrange an account manager within 24 hours to contact you! We wish you have pleasant trading experience!
