Fundamental Oil Report (2011-04-15)

By @ibtimes on

NewsOil Prices fluctuate after Chinese data PreviousForecastAnalysisCrude oil prices fluctuated heavily this morning within a tight range and around critical levels after yesterday’s gains. The market was mixed by the Chinese amid the tension rising in Libya.

Crude is hovering around $108.40 per barrel after gaining to the high of $108.73 following the better than expected growth in the first quarter from China by 9.7%, which bolstered gains on demand expectations from Crude’s biggest consumer. Nonetheless, fears of monetary tightening from the central bank as early as today drove crude south with equities, recording so far the low of $107.91 per barrel.

China’s inflation rose an annual 5.4% in March, the fastest pace since 2008, which ignited the fears in the market. The central bank targets 3-4% inflation range which they consider stable for the economy and with rising inflation pressures they are expected to boost the reserve requirements to drain liquidity.

The conditions in Libya continue to be a source of volatility for crude oil as investors fear over further supply shortages. The NATO chief said the alliance need more attack jets to attack Qaddafi forces as fighting continues on ground.

The fighting is near the oil port city of Brega which keeps the jitters ongoing in the market. The Middle East unrest is keeping an upside support for crude and though the IEA said they expect more gains, but saw for now the possibility for high prices to dent demand.

Debt woes in Europe are back haunting the market and adding more volatility. Ireland’s credit rating was cut two steps by Moody’s Investors Service while Greece is set to announce further austerity measures amid speculation on the need to restructure its debt.

Heady data is still awaited from the US session with inflation, manufacturing and confidence figures on the queue, and accordingly high volatility will prevail today and we see the possibility for crude to continue soft on the prevailing sentiment unless investors turn again to focus on good growth data instead of inflation. 

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