As predicted in previous analyses offered by ForexYard, the sudden increase in the price of Crude Oil during the first days of the conflict in Gaza was more of a result of investor worries and speculation. Now, as commodity traders come to realize that the conflict between Hamas and Israel has very little influence over the production or shipping of oil, they start to price back in their previous forecast of weakened energy demand and a stronger USD. As such, traders are starting this week anew with fresh sell positions on Crude Oil.
Helping to support this notion was the psychological price barrier of $40 a barrel being breached just prior to the conclusion of the market's operating hours last Friday. This convinced some traders that a price deterioration was a reasonable expectation for the start of this week's trading. The fact that the gas crisis between Russia and Ukraine has done little to curb the falling price of Crude Oil merely highlights the weakness in global energy demand. Short of a significant, and acknowledged, production cut from OPEC and Russia, the price of Crude Oil will undoubtedly continue downward.