While the global market experts were making fearful predictions of another Gulf crisis due to the prolonged Syrian unrest, situations worsened when US warships fired missiles at a Syrian airbase. The results were what any market trader would expect, oil prices skyrocketed instantly. No sooner did the US missiles hit the Syrian government airbase, oil trades touched the highest peak of the month. (Information Credit: easyMarkets)
Initial Effect of US Missile on the Financial Markets
Although there was geopolitical uncertainty in the Middle East due to a six year old civil war in Syria, things were ramped with tough actions coming from US government. All the financial markets including oil, gold, stocks and foreign exchange reacted strongly to the Syrian attacks. Oil rigs of U.S rose for a week. It stopped at 672 rigs. This was the twelfth week in a consecutive row that drillers added on rigs.
Brent crude futures went up by 29 cents reaching $55.17 a barrel after hitting the intraday peak point of $56.08. This was the highest price since March 7 this year. These price changes occurred shortly after the missile strikes were announced.
U.S WTI crude futures went up with 40 cents and reaching $52.10 a barrel after reaching the intraday high of $ 52.94. The US strike sent the oil markets back into the bullish mode after the dull week prior the attack.
Reason behind the Market Fear
As the oil market started looking bullish again, the chances of geopolitical risks in middle were back on the radar. Although Syria is not a major oil producer itself, its location in Middle East and alliance with big oil producers of the region is the main reason why economists and trading experts were afraid about the future.
The Market after US Economic Data and Surging Oil Production
The prices started to stabilise after the economic data was released. The sharp moves in the prices of various financial markets were reversed due to the weaker than expected US employment figures. As the fear of increase in supply and escalation of conflicts faded from the market, the oil prices further stopped in their upward trail.
In the latest market condition, oil has taken a bearish plunge. As the bears started taking control of the market, the oil prices started to slide. This plunge is caused by the surging oil production in the U.S and return of Libyan oil in the global market.
This is how the oil has been sliding up and down the price ladder in the month of April and in the beginning of May.
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