Crude oil prices face a day of reckoning as the United States decides whether it will remain in the Iranian nuclear accord, as well as the realization is that due to underinvestment in oil, it might be difficult to replace Iranian oil if it is taken off the market.
Crude oil prices are walking a tightrope as attempts to break out in either direction this week have failed. More questions and fewer answers. The oil trade is marking time as it waits to see whether the United States will walk away from the Iranian trade deal or if Iran decides to negotiate, which is something they have said they will not do. We saw oil rally hard as the U.S. stock market rebounded from sharply lower levels and reports of a lot of activity and an Iranian nuclear facility.
Crypto currencies have been in demand again of late, with prices making higher highs and higher lows. It is not clear what exactly is behind the rally but with the stock markets falling in the U.S., they may have found some safe-haven flows.
Today’s main event risk for the dollar, and potential market shaker will be the outcome of the Federal Reserve’s meeting, which is widely expected to conclude with monetary policy left unchanged. Although May’s FOMC meeting will not include a press conference or fresh economic projections, investors should not be quick to expect the meeting to be a “non-event.”
Crude oil prices fell back yesterday as most oil traders agreed that Iran lied about their nuclear ambitions, but really, they were old lies that we have already heard before. Because there was no real new information, the market then focused mainly on the soaring U.S. dollar and concerns that red-hot global demand may ease as data in Europe was less than overwhelming.