Crude oil, Venezuela crisis and US-China trade talk trending points
- Crudeoil price may leap forth, as US Treasury department imposes sanction on Venezuelan state-owned crude miner, PDVSA, which used to export 5,20,000 barrels of heavy crude per day to United States
- US & China, still appears miles apart from reaching a deal, as the complexion of the tariff talk may get derailed, when it comes to Intellectual property right transfer and technological independence of the US firms doing business in China.
- The US Dollar may drop further ahead of US GDP & FOMC minutes this week, which would likely to retain its dovish rate decision, and the US GDP may display a decay followed by 35-day long record US government shutdown.
Crisis on Venezuela aids crude oil price to throttle, while US dollar appears to be rattled by dovish FOMC and boorish US GDP on Q1, 2019
Crude oil price had jumped straight away, after the US Treasury’s Mnuchin had said in a Bloomberg interview that they were going to impose sanction on Venezuelan state-owned oil miner, PDVSA, to intensify pressure on President Nicolas Maduro, who was recently reelected, although the country is in a chaos, as the opposition leader, Juan Guaido had proclaimed himself as interim president last week on Wednesday (the 23rd of January, 2019), being backed by his US and EU allies.
Adding further strains in to the existing wound, the EU countries had pledged their supports on to Opposition leader, Juan alongside United States, urging the nation’s armed forces backed President Nicolas Maduro to arrange a fair election within eight days under an interim government ruled by the Opposition. Watering all of the western efforts, the Venezuelan President declined to step down and had been on a lookout for a new oil refining nation instead US, which might have been an Asian country, such as India or China, as reports revealed.
While these stacks of geo-political tension had been piling up, Washington and Beijing have been in talk to dislodge their trade differences including intellectual property right transfer and independence of US firms doing business in Beijing. Apart from that, the FOMC minutes would highly likely to put US dollar under pressure, although recent reports revealed that the Fed Chair has been trying to grapple with the mounting pressure from Trump Administration of not hiking the interest rates further amid nerve-wracking worries over Wall St., as he has been seen to meet democrat leaders on the Capital Hill. Concomitantly, the US GDP data would likely to falter following 35-day long federal government shutdown and the United States might experience another round of shutdown from February 15th, if the US president, Donald Trump, has not been granted that $5.6 billion funding over the Mexican border wall issue, which had been one of the most prominent promises among his election campaign agenda.
US Crude daily price chart
As the US dollar would likely to falter further and the Crude export level would decline followed by the sanction on Venezuelan crude, the crude oil price seems highly likely to gain further ground on the uphill. While this report is being prepared, on GMT. 13.30, Jan. the 30th, Wednesday, the US crude was 0.55 percent up to $54.02 per barrel and the Brent crude had been 0.51 percent up to $61.97 a barrel.
Although, both of the crudes had been testing the nerves for the past few days, rattling between $50-$55 per barrel for the US crude and $58-$63 a barrel for the Brent Crude, and struggling to find a lasting momentum, an evening star with a jigsaw pattern might have already been concluded, followed by the sanction of Venezuelan oil.
Since, further weakening of a much softer US dollar would weigh on a stronger Crude oil price, an upside break above $55.34 for the US crude and $63.98 for the Brent crude appears to be on the trading table.
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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]