Oil rally related to Middle East conflicts

Published: 8 May, 2013 11:08

Oil rally in the Middle East conflictIn the latest trading news for commodities, crude oil has continued its rally as tensions continue to mount in the Middle East. With no end in sight in the conflict in Syria and as rumours of chemical weapons crimes continue to mount, trading analysts are beginning to speculate whether western powers may eventually be forced to intervene.

Although the geopolitical situation in the Middle East has caused oil to post gains of 6% in the last three trading sessions, any substantial rise has been dampened by the United States’ domestic market.

Decreased demand in the west as well as an increased prevalence of more energy-efficient vehicles will continue to weigh upon any rally that crude may make in the near future. However, should the situation in Syria continue to deteriorate, we may witness more short-term jumps in the days and weeks ahead.

In the gold trading market, many online commodity analysts are increasing their long-term positions on gold. This is primarily due to the fact that central banks in Europe and the United States have hinted that economic stimulus packages will continue to be implemented. Furthermore, there seems to be no end in sight for struggling economies such as those in Greece, Spain and Portugal.

This sentiment was underpinned then ECB president Mario Draghi stated that additional rates cuts for the European Union may be necessary in the future. While many commodity traders and hedge fund managers see this as a perfect buying opportunity, billionaire investor Warren Buffett unequivocally stated that the metal still has little appeal; signaling that Mr. Buffett has taken a protracted bearish stance.

Notwithstanding Mr. Buffett’s position, further currency debasement and possible future quantitative easing have many involved with gold trading placing themselves in a decidedly more optimistic stance than only a few short weeks ago.

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