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Forex and Oil — EUR/USD Peaks Above 1.44

December 17, 2008 by

Today the oil was in the focus of many currency traders as the extraordinary OPEC meeting in Oran, Algeria, was deciding the oil output cut and also the U. S. Energy Information Administration reported its weekly data on the commercial crude oil and distillate inventories. The oil traded with the elevated volatility — a small drop on the NYMEX Crude Future, and the small gains on both Brent and WTI. It looks like the investors were more driven by the U.S. crude oil inventories than the OPEC decision.

EUR/USD continued with its strong bullish rally peaking through the chart and breaking the important resistance level near 1.4400. The daily maximum was at 1.4437 today but the currency pair retreated from it and is now trading near 1.4324.

Crude oil inventories in U.S. increased by 0.5 million barrels last week — more than 0.4 million barrel a week before — and are now near the upper limit of
the average range for this time of year. Distillate fuel inventories increased by 2.9 million barrels.

OPEC during its 151st meeting decided to cut the daily oil output by 4.2 million barrels from the September level of 29.045 million barrels per day; the new quota target is 24.845 million barrels per day. Positive for oil and negative for the U.S. dollar this data can’t be interpreted as a clear signal. The question remains — if all OPEC countries will follow the decision and actually cut the production?

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