Iran puts oil collusion hopes to bed

Today saw the FTSE finally break through 6024, following two unsuccessful attempts earlier this week. 

Oil rig
Source: Bloomberg

However, these gains are proving short-lived as an Iranian rebuttal of oil production cuts saw oil prices drag the index lower. The feeling is that markets are treading on thin ice in this recent rally, knowing that at any moment crude prices can crash lower, taking the FTSE with it.

The release of weaker-than-expected eurozone CPI readings this morning heightened expectations of European Central Bank action in March. However, this perceived dovish ECB outlook was complimented by the fact that Federal Reserve funds futures are now pricing in zero US rate hikes in 2016. So much for the four that were speculated at the December meeting.

Iran effectively dashed any hope of a Russian-engineered cut across both OPEC and non-OPEC members this afternoon, by announcing that it does not support the idea of an emergency meeting or cut to production. Unsurprisingly for a country that has been champing at the bit to get its oil production back to full operational status, Iran has little desire to cut back immediately.

Tensions between Saudi Arabia and Iran mean that the threat of Iran taking market share in the face of Saudi cuts will mean next to no chance of a Saudi reduction.

FTSE 100 risers and fallers (as of 4.35pm)
 

Company % change Index points
Inmarsat +5.16 +0.93
Old Mutual +5.14 +1.57
Hargreaves Lansdown +4.28 +0.47
Barclays +4.26 +4.9
St James's Place +4.15 +0.76

 

Company % change Index points
Glencore -1.07 -0.43
Antofagasta -0.99 -0.05
BHP Billiton -0.47 -0.26

Key charts to watch

Dow Jones

The Dow is continuing to push higher and but the resistance at 16,278 will need to be cleared before the bulls will feel they are in control. An hourly close above 16,278, will be a bullish indicator and the next major resistance levels will be 16,483 and 16,626. 

GBP/USD

The pound has fallen back into its downward trend against the US dollar. The $1.4173 mark is providing support for now, but if we get an hourly close below it that would be a bearish sign, and $1.4080 is the next major support level in sight. If there is an hourly close above $1.4173, a correction of today’s losses could be possible. Rallies will encounter resistance at $1.4230 and $1.4413.

US crude oil

Oil’s rally appears to be running out of steam, but it is being support by Thursday’s high of $33.26. If we see an hourly close under $33.26, it would be a bearish indicator, and the next major support levels will be $32.40 and $31.54. If there is an hourly close above $33.26, it would be a bullish sign, and the next big resistance level in sight is $35.20

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