Spot Crude Oil Trading Bounces Back
February 8th, 2010 Posted in Oil and Precious Metals
Name: Russell
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Spot crude oil prices have been climbing back during today’s trading after the dollar weakened against the euro and traders moved back into riskier assets such as equities and commodities.
Near lunchtime during the New York trading hours, spot crude oil prices were trading at $71.50, practically unchanged from their opening price. However, spot crude oil prices did fall as low as $70.76. The price is seen near the bottom of the commodity’s trading range after reaching a high of $77.99 on February 3rd.
Spot crude oil trading has been heavily influenced by the recent bearish move of the EUR/USD. On Friday the currency pair fell to an 8-month low as traders have been seeking to avoid overall risk due to the fiscal crisis surrounding the EU nations of Greece, Spain, and Portugal. Fears of a necessary bailout of these nations by the European Central Bank or the International Monetary Fund have put significant pressure on the 16-nation currency. As such, the currency of choice has been the dollar, fueling the currency’s recent strength.
Today the euro regained ground against the dollar and prices for Greece’s credit default swaps eased, allowing for the opportunity for crude oil to strengthen. Commodities are valued in dollars. As the dollar rises, crude oil prices tend to fall.
If the dollar remains strong, a continuing decline may be seen in the price of crude oil. However, significant buying action has been seen as the price of spot crude oil dips below the $70 level. This price may present an opportunity for traders to go long on spot crude oil as the commodity may be oversold at this price level.
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Tags: Commodities, dollar, EUR/USD, Forex Trading, spot crude oil, spot crude oil prices, spot crude oil trading
