NewsCrude still pressured by prevailing downbeat prospects for growth
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AnalysisCrude starts the day hammered with negativity trailing other markets, erasing yesterday’s first gain in four days as fears of the glut in supply alongside uneven and instable economies and recovery haunts the market.

Crude futures ended yesterday higher by almost 1.0% adding 72 cents to $74.36 a barrel, the first gain in four days. Nevertheless, crude continued the downside movement in the Asian session today as equities continued to trade lower on concerns over further credit growth from China’s the region’s biggest growth support.

Fears over the prospects for growth have increased once again, and jitters roam the air with the Chinese recent moves in mind to curb credit growth which is to rein in on the recovery’s momentum. Further downside pressures were also powered in the market from South Korea which said that growth slowed in the fourth quarter to the least in three quarters pressured by subdued demand and government spending in addition to weak exports growth.

The prevailing sentiment in the market is bearish and that on its own is pressuring equities lower and pushed the dollar and the Japanese yen higher as investors shun risk taking. The gauge tracking the dollar’s strength versus its major six counterparts, the dollar index was trading at 78.43 at the time of the report higher from 78.17 opening levels.

Volatile economic data from across the globe is further agitating investors and fueling the expanding dark cloud over the outlook. The United States economic prospects are still fragile especially after investors saw the deep slump in existing home sales in December by 16.7%. Demand from the biggest crude consumer is still below its seasonal average and high inventories are keen to keep demand in check.

Further economic data are in focus for the week, and today Europe is to prove the health of its recovery, especially as the fourth quarter GDP from the United Kingdom is expected to report the exit of the economy from the recession after it trailed its peer.

It is evident from the global performance indicators assessing the health of the recovery and the prospects for the outlook that crude will find it difficult at the time to consolidate above $80 a barrel. Yesterday, Saudi’s Oil Minister, Ali al Naimi reiterated his stance calling crude prices among $70 - $80 a barrel as “almost perfect” supporting both consuming and exporting nations without pressuring the global recovery.

We still see that this week is likely to be very volatile for commodities and oil in particular. The weekly inventory status report is not the only major event for tomorrow, where the FOMC decision might provide further monetary outlook insight which investors will surely reflect on the market and on the dollar.

As of 7:30 GMT crude futures were trading around $74.23 down by 1.37%; heating oil futures were down by 1.19% at $194.25 per gallon. As for London, Brent was trading down by 1.33% at $72.71.