NewsThe EIA ReportPrevious1.9 million barrelsForecast0.9 million barrelsAnalysisCrude was trading below $82.00 in the Asian session amidst fears that had overshadowed markets yesterday after announced credit rating downgrade by S&P for both Greece and Portugal, where it triggered a strong sell-off across markets. On the other hand, reports showed higher US crude inventories for the previous week, which were higher than expected that added strong bearish pressures on oil.
Crude futures today opened around $81.77 and are currently trading around $82.53 per barrel dropping by 0.59%; it recorded so far its highest around $82.35 and lowest around $81.64 per barrel. Meanwhile, crude settled yesterday on lows down by $2.05 per barrel around $81.82 per barrel.
Standard and Poor's reduction of credit rating for both Greece and Portugal shocked markets, where this surprise came at the same time as Greece is struggling to reduce its budget deficit by accessing the financial aid package it received from the EU and IMF worth 45.00 billion euros; however, they may face several obstacles before they receive the package, especially before their debt matures next month!
This announcement increased anxiety in global markets, specifically since Greece's debt woes have been one of pivotal issues for investors all over the world. In addition, we witnessed a sharp drop in stock markets, thus meaning reduced risk appetite due to investors' attraction to the dollar, the Japanese yen, and gold as a safe haven; therefore reflecting negatively on trading in commodity markets, specifically crude.
The RJ/CRB index yesterday dropped by 5.20 recording 276.48; whereas the dollar index – which measures the dollar's performance against a basket of major currencies- is trading today around its highest levels for almost a year recording 82.33, where it set it highest around 82.43 and lowest around 82.09.
Meanwhile, the API announced late yesterday that US crude inventories have risen compared to the previous week, it superseded expectation in markets by 5.2 million barrels reported buildup.
The long awaited weekly EIA report is due for release today, where expectations point to an increase in crude inventory by 0.9 million barrels, thus meaning persistent weak demand levels in the US, which will negatively affect oil, even as Greece's debt woes remain the strongest toll on markets.
In London, Brent is trading around $85.26 per barrel lower by 0.61% or by $0.52.