The U.S. trading session during daylight saving time runs from 8:00 PM to 4:00 AM Beijing Time. This period is often marked by a flurry of social media activity from U.S. political figures, the scheduled release of key economic data, and speeches from Federal Reserve officials. The price movements during this session frequently determine the final shape of the daily candlestick for crude oil.
From 21:09 to 23:04 Beijing Time, the price of U.S. crude oil surged rapidly from $88 to $93, accumulating a gain of approximately $5 and breaching the key psychological level of $90. Subsequently, from 23:05 Beijing Time to 01:43 the following day, crude oil began to retrace these gains, ultimately closing around $89, just below the $90 mark.
Looking Beyond Economic Data
Consulting the economic calendar reveals that two major data points were released during this five-hour period of high volatility. The first was the S&P Global Manufacturing PMI, which came in at 55.1, slightly below the previous 55.3. This minor change has a low correlation with oil prices.
The second data point was the U.S. ISM Manufacturing PMI, which registered at 54, exceeding both the forecast of 53 and the prior reading of 52.7. While this positive data is logically supportive for the U.S. economy and the dollar, and an economic recovery could aid crude oil demand, it alone is insufficient to explain such a dramatic price surge.
The Role of Geopolitical News
When data fails to provide a clear explanation, the cause often lies in geopolitical news. The trajectory of U.S. crude oil in recent months has been closely tied to developments, particularly concerning negotiations between the United States and Iran.
At 21:14 Beijing Time, reports emerged that Iran would suspend communications with the U.S. in response to actions by Israel. This timing aligns perfectly with the start of crude oil's rally, indicating that this news was the primary driver for the initial surge during the U.S. session.
Iran's statement referenced actions by Israel, not directly against itself, but targeting Beirut, the capital of Lebanon. Confrontations between Israel and Lebanon have been ongoing, with minor incidents persisting even during U.S.-Iran ceasefire periods. Iran's declaration evidently stoked market fears of a potential breakdown in U.S.-Iran negotiations.
Between 00:00 and 01:00 Beijing Time, U.S. political intervention began. Initial statements claimed no notification had been received from Iran about suspending talks. Subsequently, Lebanon communicated its agreement to a ceasefire. Around 01:30, it was formally announced that hostilities between Israel and Lebanon had halted. This sequence of news developments, which again mirrored the movements in crude oil prices, underscores how deeply international oil prices are currently tied to Middle Eastern geopolitical issues.
The market's reaction was not limited to crude oil. The price of gold also experienced significant volatility. From around 23:00 Beijing Time to 02:00 the next day, gold rose from approximately $4,447 to $4,495, a $48 gain that far exceeds typical daily fluctuations. This highlights how market risk aversion also intensified in response to the evolving news landscape.
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