Oil prices reaching for the sky as geopolitical tensions in the Middle East intensify and supply concerns rise. WTI and Brent surged near $120 per barrel amid fears of disruptions around the Straits of Hormuz, while markets closely watch potential G7 strategic reserve releases and the broader impact on equities, the USD, and global risk sentiment.
Oil prices rallied like there is no tomorrow
Oil prices rallied in today’s Asian session and it’s characteristic that at some point WTI’s price action climbed as high as almost $120/barrel, as did Brent’s price. The worries for the supply side of the international oil market peaked as the US-Iran war is ongoing with no stop in sight and the Straits of Hormuz are almost fully closed. The current environment has led to oil prices reaching for the sky, as traders react to fears of a major disruption in global supply. Such developments have pushed volatility higher, reinforcing the narrative of oil prices reaching for the sky in global energy markets.
On the flip side, G7 countries stated that they will be discussing the release of 400 million barrels from their strategic reserve of 1.2 billion barrels, which tended to ease market worries somewhat, relenting by the early European session, half of the gains made since today’s opening.
Xlence Research Team opinion
Should the market worries for the supply side of the international oil market ease even further, say for example should the G7, signal that they are willing to release as many barrels as necessary; in order to keep oil prices under control, we may see oil prices correcting even lower.
Should on the flip side, market worries intensify further, for example should the G7 meeting for oil be unconvincing for their intentions, or should we see further escalation in the US-Iranian war, we may see oil bulls pushing prices higher.
US stock markets retreat
US, Asian and European equities were on the retreat today in the pre-American sessions, as worries intensified further given the steep rise of oil prices. Yet US equities had an additional reason given the US employment report for February, released on Friday. Overall the market’s cautious sentiment seems to be maintained and may have been also a bit more enhanced given the risks surrounding private debt.
Xlence Research Team opinion
We see the case for the situation of the oil market being the key determinant on a fundamental level for US stock markets. Should we see market worries about the issue intensifying further, say for example should oil prices start rallying again, we may see US equities retreating further. Vice versa, should we see market worries easing abut the path of oil prices, we may see US equities possibly recovering somewhat.
USD regains traction in the FX market
The USD was rather muted on Friday as the release of February’s US employment report showed a substantially weakened US employment market. Yet in today’s Asian session opened with rally as the flight to safety by investors provided support for the greenback. Market worries for higher oil prices provoking a possible intensification of inflationary pressures in the US economy, thus may add pressure on the Fed to keep rates unchanged for longer. Also in the week’s calendar, we have the release of US inflation metrics, namely of the CPI and PCE rates on Wednesday and Friday respectively, which could increase volatility in the FX market.
Xlence Research Team opinion
Should we see the market’s worries intensifying about oil prices, we may see the USD’s role as a safe haven intensifying and thus the greenback getting more support. On the other hand, should we see the market’s worries easing the USD may be allowed to correct lower.
Bitcoin’s price stabilises
Bitcoin’s price dropped and stabilised, over the weekend and despite some slight bullish tendencies in today’s Asian session, remains relatively unchanged as these lines are written. It’s notable that Bitcoin’s price remained relatively unchanged despite the turmoil in the markets. Yet we also have to note that the market seems to remain in a bearish predisposition of the crypto’s price.
Xlence Research Team opinion
Overall we tend to maintain a bias for a sideways motion of the crypto’s price and any rise of the crypto’s price may be treated as a correction higher, unless it surpasses 73k. Also we note the bearish predisposition of the market for the crypto which may ultimately lead to a drop of its price for the fifth consecutive day.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
