Crude oil price soars as a biggest oil refinery in Saudi is attacked
The price of crude oil jumped by more than 15% after chaos emerged in the Middle East. On Saturday, the biggest crude oil facility in Saudi Arabia was hit by drones. Houthi rebels in Yemen claimed responsibility for the attack while the United States attributed the attack to Iran. Iran is a major sponsor of Houthi rebels. The Abqaiq plant that was attacked processes about 5% of the global daily output and is operated by Saudi Aramco. This attack raises the risk of retaliation by Saudi Arabia and military intervention by the United States. In a statement, Trump ordered the release of the strategic oil reserves to offset any supply challenges. He also said that the US was locked and loaded and ready to retaliate.
Chinese stocks were mixed, with the A50 index falling by 65 points and the Shanghai composite rising by 3 points. This happened after China released a series of mixed economic data. In August, the country’s fixed asset investment rose by an annualized rate of 5.5%. This was lower than the expected 5.6% and the previous 5.7%. The industrial production rose by an annualized rate of 4.4%, which was lower than the previous 5.8% and the consensus estimate of 5.2%. In the month, retail sales rose by 7.5%, which was lower than the previous 7.6%. On a positive note, the unemployment rate dropped to 5.2% from the previous 5.3%. The weak data from China raises the stakes for the country ahead of planned meetings with the United States.
The USD index was relatively unchanged in the Asian session as investors focused on the upcoming Federal Reserve decision. The bank, which will start its meeting tomorrow, is expected to deliver its decision on Wednesday. It’s thought the bank will lower interest rates by another 25 basis points in a bid to support the economy. A hawkish Fed will push the dollar higher and increase the skepticism from Donald Trump. A dovish Fed, on the other hand, could be accused of not doing enough.
The price of crude oil rose sharply today after the drone attacks in Saudi Arabia. The XBR/USD pair reached a high of 67.47 and is currently trading at 65.62 as traders continue to look out for developments in the Middle East. This price was the highest it has been since June this year. On the daily chart, the price is slightly above the 38.2% Fibonacci Retracement level. The price is also above the 28-day and 14-day moving averages. Today, the price could remain volatile as investors gauge the news coming from Saudi.
The EUR/USD pair was relatively unchanged in the Asian session. The pair is now trading at 1.1075, which is slightly lower than Friday’s high of 1.1110 and higher than last week’s low of 1.0925. On the hourly chart below, this price is slightly lower than the middle line of the Bollinger Bands while the RSI has remained unchanged at 51. The same has been the case with the accumulation/distribution indicator. The pair will likely remain in a holding pattern as traders eye the Fed decision.
The price of gold rose sharply as global risks rose following the attack on Saudi Arabia. The XAU/USD pair is now trading at 1504, which is slightly lower than the 1512 where it opened. Gold is often viewed as a safe haven asset, which means that traders rush to it when there are risks in the market. On the hourly chart, this price is slightly above the 28-day and 14-day moving averages and along the 23.6% Fibonacci Retracement level. The pair will likely continue being volatile as traders wait for more information on Saudi Arabia.