On Tuesday, crude oil rebounded after it fell towards $30 a barrel and later steadied around $32 per barrel which led investors to book profits after it fell to a low since December 2003. The reason for the drop was because of oversupply and dainty demand from China. As it reached to its highest today of $32.21 per barrel at 09:00AM EST, two hours later it fell to $30.58 per barrel. Analysts stated the bounce was expected to be short, as investors booked their profits. Some retail traders practice forex accounts to gain exposure to this market.
“Analysts at Barclays, Macquarie, Bank of America Merrill Lynch, Standard Chartered and Societe Generale all cut their 2016 oil forecasts this week, with Standard Chartered saying oil could fall as low as $10 per barrel. Oil has been dragged lower by a glut, China's weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for those using other currencies to buy oil,” wrote Simon Falush, a senior correspondent at Reuters.
The dollar also took a hit with The Wall Street Journal Dollar Index withdrawing from gains back to unmoved shorts after the start of old-fashioned United States trading hours. Crude oil and other dollar-entitled possessions became less expensive for holders of other currencies, and their prices often rise as the dollar fell, according to Wall Street Journal.
“It is hard to pick a bottom [for oil prices] right now because the fundamental is so weak,” said Vyanne Lai, a Senior Analyst and Economist at National Australia Bank. “Erratic actions by the Chinese government to manipulate the yuan is sending jitters that the government is unsure what direction their forex policy should be.”