By Russell Glaser – Spot crude oil traders may see a week with high volatility as we head into the holidays. Driving this week’s trading may be the key indicators and the previous week’s news event surrounding the Iranian and Iraqi conflict over a disputed oil field. Wednesday’s oil inventories may provide some spark, but the impact on the valuation of the commodity may be minute as trading desks could be thin.
The price of crude oil is currently trading at $74.45. This is up from the previous week’s opening price of $69.76, a jump of 6.7%.
Last week’s market mover which still remains an issue this week was the incursion into an Iraqi oil field by Iranian forces. The Iranians are currently holding the oil field as negotiations are ongoing.
This type of an event has the ability to heat up tensions in the volatile region, driving up market prices on increasing supply concerns in the trading of spot crude oil.
Another factor affecting the price of spot crude oil has been the rising dollar. Despite the dollar’s appreciation last week of 2%, spot crude oil prices continued their upward climb. This runs counter to typical market behavior. Traditionally, spot crude oil prices fall with a strengthening dollar.
For economic releases, traders should be looking towards Wednesday’s crude oil inventories report that may impact the market on a short term basis. We may see high price fluctuations, but don’t expect the result to carry much long term weight.
Liquidity may be thin as we approach the holidays as many trading desks will be manned with skeleton staffs. As such, we could experience the price of spot crude oil to fluctuate this week between $75.50-$72.00.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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