Oil has worst start to year since 1991
Oil has been clobbered over the last two trading days. UKOil, FXCM's Brent CFD, and USOil, its WTI CFD, have both fallen into their bearish channels between the lower blue and red bands. If the red Bollinger bands expand, volatility will be increasing.
The declines are over 9%, which is the biggest fall for the start of a year since 1991 (barrons.com). Market participants are still concerned about the global recession and demand concerns are the reason for the drop. The US Manufacturing PMI printed at 46.2 on Tuesday, implying contraction. The FOMC minutes suggest interest rate hikes are still on the table, with no member seeing cuts this year.
However, continued weakness is likely to be met with a response by OPEC+. This suggests that the downside may be limited.
Russell Shor
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
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