|News||Jitters and volatility shadow bearish pressures on crude futures|
|Analysis||Jitters and woes still surround commodities and overshadow crude oil with a downbeat sentiment. Investors that were worried over China’s monetary tightening measures were taken by further surprise with Obama’s proposal to restrict big banks.|
Conditions are very volatile across markets, which are reflecting negatively on oil from fears of the uneven and anemic recovery to monetary tightening which will dent an already expected slow recovery affect the pace of rebound on oil demand. Most Asian equities declined today continuing the bearish Wall Street ending on Friday when oil contracts slipped $1.54 to settle at $74.54 while S&P GCSI Index dropped 1.95 points to settle at 501.53.
The week’s start was not much better as oil contracts settle weakly below $75 a barrel with slight gains adjusting the deep fall seen last week. The decline was supportive to further speculation by investors, which take advantage of the drop, while other settle their existing positions while betting still on further decline this week ahead of heavy data to be released.
Our expectations for this week are generally bearish, especially as the start is to be today with further slump across the U.S housing market. This week we are expecting fourth quarter GDP data from the United Kingdom and the United States as well, while the BoJ the RBNZ and the Federal Reserve are to be announcing rates, with the focus on the latter as investors are waiting for more hints from the Feds regarding future moves on monetary policy as investors grow wary and cautious over their recovery expectations amid rising volatility of data.
That said; we should also consider earnings effect on the market which is heavily affecting oil’s trading. Earnings so far have been mixed from the U.S, especially those of financials which are heavily burdening the market. We are waiting for more earnings this week from topnotch shares like Microsoft Corp, Apple Inc and Procter & Gamble.
This confusion over the outlook and rising skepticism over the health of the recovery which is weighing down on crude oil, especially with sluggish demand and elevated inventory levels across major consuming nations, particularly the United States.
We do not expect the bullish sentiment to prevail much this week, especially with the weak expectations for the U.S existing home sales today.
Oil opened today at $74.27 setting the highest at $74.73 and the low of $74.11 and currently reversed to the downside again to trade around $74.20 a barrel as of 08:20 GMT.
Meanwhile, other NYMEX futures were trading with volatility as Heating Oil Futures were up 0.530 at $194.690 per gallon and Brent Futures were trading at $72.93 barely changed.