The US Energy Information Administration (EIA) announced a change in crude oil stocks by 3.391 million barrels on January 9, surpassing the expected drop of 2.2 million barrels. This indicates higher oil reserves than anticipated. In the market, commodities showed various movements. Silver reached a historic price of $93.50, while gold approached $4,650 per troy ounce. The increase in gold prices was influenced by a weaker US Dollar and falling US Treasury yields.

Movements In Foreign Exchange Markets

The foreign exchange markets also experienced some shifts. The GBP/USD pair faced selling pressure, nearing the 1.3420 mark. Meanwhile, the EUR/USD remained bearish, retesting the 1.1640 level as the US Dollar weakened. Litecoin saw increased activity from large investors (whales) and interest in derivatives, even with prices remaining low. Hyperliquid rebounded, trading above $26.00 due to better on-chain metrics and more activity in the derivatives market. FXStreet provides market insights that come with risks. It is essential to do detailed research before making any financial decisions, as investing in open markets involves risks like potential loss of investment. The unexpected increase in crude oil inventories signals a bearish trend, indicating more supply than predicted. This could lead to lower prices for WTI crude. However, current market fears, especially tensions in Iran, are pushing oil prices higher.

Oil Market Volatility

Due to these mixed factors, volatility is inevitable, making it risky to make straightforward bets on oil futures. A wiser strategy is to set up long straddles using WTI options. This approach can benefit from significant price movements in either direction, whether the oversupply drives prices down or geopolitical tensions hike them up. Traders should not disregard the risk premium related to Iran, especially if they focus solely on supply data. Past incidents in 2024 showed that tensions in the Strait of Hormuz could quickly add a $5-$7 premium to oil prices. This historical context makes shorting crude oil very risky until the situation improves. Additionally, there is a clear trend of US Dollar weakness, which has contributed to the record rallies in gold and silver. This trend will likely continue as discussions about Federal Reserve rate cuts persist. Data from 2025 showed a strong inverse relationship: when the US Dollar Index fell by 4%, gold rose by over 12% in the latter half of the year. With gold prices above $4,600, chasing this rally with direct long positions is risky. A safer approach is using call options to bet on upward movement toward $4,700, which can limit potential losses if the trend turns. For those expecting a price drop, buying puts provides a more efficient way to prepare for a downturn than shorting the futures market. Overall market uncertainty is evident in the VIX index, which is stable above 21, indicating considerable trader anxiety. This heightened volatility makes option premiums high across the board. Such an environment is suitable for traders selling premiums through strategies like iron condors on major indices, betting that the market will stay range-bound despite the news. Create your live VT Markets account and start trading now.

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