Geopolitical News Supporting Crude Oil Surge

April crude oil futures finished higher on Wednesday. Today’s strength surprised some traders because many felt that yesterday’s strong surge was overdone. Crude oil rallied sharply higher on Tuesday because of high demand in futures contract expiration and increased cold weather demand for gasoline and heating oil.

The news that Libyan output decreased again drove up demand for Brent crude which underpinned all crude oil contracts. Reports that South Sudan rebels seized control of the capital in a key oil-producing state also helped boost prices. Short-covering and speculative buying was also triggered by protests and instability in Venezuela.

Comex April Gold finished lower, however, traders were not able to take advantage of the weaker Dollar early in the session. A late session rebound in the Greenback could pressure gold into the close. At 2:00 p.m. ET, the U.S. Fed will release its February minutes. This could create volatility. If the report drives the dollar lower then look for gold to be underpinned. A stronger dollar could be bearish for gold. Tomorrow, the U.S. will release its latest consumer inflation data. This news could be a market mover.

The EUR/USD finished lower after an early attempt to rally faltered. The choppy, two-sided trade in the U.S. Dollar gave bullish Euro traders an excuse to pare positions after yesterday’s surge. There were no major Euro Zone reports today so investors reacted to the U.S. housing data. The weak housing data should have driven the Euro higher, but traders discounted the decline because of the cold weather. Later today, traders should look for volatility following the release of the Fed minutes.

The GBP/USD reversed course after early session weakness. The weaker-than-expected U.K. consumer inflation data earlier in the week is still giving the market a bearish tone. Short-term oversold conditions and position squaring ahead of the Fed minutes today and tomorrow’s U.S. consumer inflation data are also helping to underpin the market today.

Today, the U.K. reported on its employment situation. The Claimant Count Change which is similar to the U.S. Weekly Jobless Claims dropped by 27.6K. This was better than the -18.3K estimate. The unemployment rate rose slightly to 7.2% from 7.1%, but the Average Earnings Index came out better than the estimate at 1.1%.

Volume is light today ahead of the Fed minutes, but look for it to pick up along with volatility at 2:00 p.m. ET.