Holiday Trading Sees Oil Prices Rise Amid Global Uncertainty
As the holiday season approaches, oil prices have seen a significant surge, driven by a combination of factors including President-elect Donald Trump’s unpredictable foreign policy moves and reports of China’s plans to stimulate its economy through massive bond sales.
China’s Economic Stimulus Plans Boost Base Metals
According to Reuters, China is preparing to sell a record 3 trillion yuan ($411 billion) of special bonds next year, a move aimed at bolstering its slowing economy. This news has sent base metals such as nickel soaring, with investors betting on a potential upswing in demand.
Oil Futures Push Past 50-Day Moving Average
Crude futures have broken through their 50-day moving average, triggering a wave of technical buying. This comes as the market digests Trump’s threats to seize the Panama Canal, impose stricter sanctions on Iran, and impose tariffs on China, all of which could have significant implications for global oil balances.
Dollar Strength Tempers Commodity Gains
Despite the surge in oil prices, the dollar has held near a two-year high, tempering commodity gains. This has led to a mixed picture for investors, with some commodities benefiting from the dollar’s strength while others are held back.
Markets Assess Trump’s Impact on Global Politics
“The festive season seems to see little break from Donald Trump, with markets once again wondering how much of what Trump said will actually be followed through,” said Yeap Jun Rong, market strategist for IG Asia Pte. As the world waits to see how Trump’s policies will play out, markets are likely to remain volatile.
Trading Volumes Slump Ahead of Holidays
Aggregate trading volumes of WTI crude have slid well below their daily averages, and are likely to remain muted as markets close for year-end holidays. This lack of liquidity has contributed to the tight range in which crude has been trading since mid-October.
Geopolitical Uncertainty Weighs on Oil Market
Despite the recent surge, crude prices remain vulnerable to geopolitical uncertainty, which is countering lackluster demand in top importer China and expectations for ample supply from the Americas. OPEC and its allies are also set to begin unwinding production cuts in 2025, adding to the uncertainty.
Leave a Reply