Crude Oil Prices Surge on Saudi Pipeline Attacks, GBPUSD Underperforms - US Market Open
MARKET DEVELOPMENT – Crude Oil Prices Surges on Saudi Pipeline Attack
Oil: Rising geopolitical premium has underpinned oil prices throughout the European session with Brent crude futures rising over 1.3% to test $71/bbl. The latest on the geopolitical front came after the Saudi Energy Minister had confirmed that two Saudi pipelines had been attacked by drones. This in turn saw Saudi Aramco halt pumping oil in the pipeline so that the damage could be evaluated. Consequently, with tensions in the middle east on the rise, this has raised concerns over potential supply disruptions thus keeping oil prices supported despite the dampened risk appetite.
EUR: The Euro pared its marginal gains after Deputy PM Salvini stated that Italy are prepared to break the EU budget rules and exceed the 3% budget deficit limit in order to spur jobs. As such, while the Euro has been gently creeping higher in recent sessions, this provides a reminder that downside risks to the Eurozone outlook remains, particularly as we head towards the EU elections where support for populist parties are expected to rise. Elsewhere, German ZEW data (full story) had been relatively mixed, prompting a rather muted reaction in the Euro.
GBP: The Pound is underperforming as cross party talks between the government and labour party yield little progress. It is becoming increasingly like that talks are set to fail as Theresa May refuses to move away from her Brexit red lines. Thus, pressure on the Pound continues with GBPUSD eying a test of the 1.29 handle on the downside. While support is seen at 1.2890, a close below 1.29 could spark a bearish breakout with a move towards 1.2850 on the cards.
JPY: A slight rebound in equity markets has seen USDJPY pick up, however, gains could be somewhat limited with resistance situated at 109.85 and 110.00. However, with the 109.00 support holding at yesterday’s session the pair may see a bout of consolidation before another test of support. Equity markets remain fragile despite the slight lift, as such, risks remain tilted to USDJPY downside.
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WHAT’S DRIVING MARKETS TODAY
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--- Written by Justin McQueen, Market Analyst
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