Geopolitical risks grow – ING

FXStreet Insights Team FXStreet

The oil market spiked in early morning trading on media reports suggesting that Israel could be planning a strike on Iranian nuclear facilities, ING’s commodity analysts Warren Patterson and Ewa Manthey note.

Oil market to price in a larger geopolitical risk premium

"The news, based on US intelligence, may signal a significant escalation, prompting the oil market to price in a larger geopolitical risk premium for the region. Such an escalation would not only put Iranian supply at risk, but also in large parts of the broader region."

"However, with NYMEX WTI up only a little over 2% at the time of writing, it seems the market is not entirely convinced by these reports -- at least for now. Iran currently produces around 3.35m b/d of crude oil. There are indirect nuclear talks between the US and Iran, which, if successful, could give the market further upside. However, these talks appear to be running out of steam."

"Numbers overnight from the American Petroleum Institute show US crude oil inventories increased by 2.5m barrels over the last week. Stock changes in refined products were more constructive, with gasoline and distillate inventories falling 3.2m barrels and 1.4m barrels, respectively. Inventory data continues to suggest a tightening middle distillate market. Energy Information Administration (EIA) data last week already showed that US distillate stocks are at their lowest in 20 years for this time of year."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold jumps above $5,000 as China's gold buying drives demand

Gold price rises to near $5,035 during the early Asian session on Monday. The precious metal extends its recovery amid a weaker US Dollar and rising demand from central banks. The delayed release of the US employment report for January will be in the spotlight later on Wednesday.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.