FOMO Friday: Oil Ends The Week In The Red

32204 fomo friday oil ends the week in the red

Well, it’s been a much quieter week for FX markets. On the back of the US jobs report last week the market appears to be awaiting the next major catalyst. We have seen some interesting moves, however, with the reversal lower in EUR, and strength in AUD and NZD headlining the week’s action. However, talking with traders this week it seems that the move which has captured the most attention is the correction lower in oil. Crude prices fell around 5% over the week, marking the heaviest week of sales in crude for months. So, let’s take a look at what was driving the action and, as ever, if you caught the move? Well done! If not? There’s always next week!What Caused the Move?US – Iranian Talks Weigh on OilThere were a couple of factors weighing on oil this week, however the biggest of these was news of fresh talks between the US and Iran. Officials have been engaged in talks aimed at restoring the 2015 nuclear deal which was abandoned during the Trump presidency. If talks are successful, the outcome would include the lifting of US sanctions applied to Iran, including sanctions on Iranian oil exports. The US is keen to help curtail the ongoing surge in oil prices and, with OPEC resisting pressure to hike oil production at a faster pace, securing the return of Iranian supply would be highly beneficial. For oil markets, if a deal is agreed, this would likely result in lower prices as traders brace for the return of a huge amount of supply.Stronger USD Adding PressureThe second factor weighing on oil prices here was the resurgence in the US Dollar this week. On the back of a solid jobs report on Friday, USD has seen better demand this week with the Dollar index moving higher off support. This move was further bolstered by a better-than-expected Jan CPI reading mid-week. Looking ahead, with the Fed poised to lift rates in March and with the market looking ahead to a series of rate hikes across the year to come, USD looks likely to gain further, which should help curtail oil prices, particularly if supply starts to pick up. So, that’s the fundamental backdrop, let’s take a look at the technical picture.Technical ViewsCrude OilThe rally in crude prices off the December lows has seen price stalling into a test of the bull channel top and the 1.27% Fib extension of the last bullish swing in this series. With indicators turning lower, there is room for a deeper correction near-term. However, while prices holds above the 83.75 level, the focus is on a continuation higher towards 95.93 next.

Source: Tickmill

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