NewsCrude starts the week bearishly pressured by Saudi supply comments PreviousForecastAnalysisCrude oil starts the week with downside tendencies as the market is pressured with the start of the week with debt woes and weighed down by oversupply comments from Saudi Arabia.
Crude oil futures trended lower this morning as much as 0.9% to hovering at its lows at this time around $108.71 per barrel leaving the highs at $109.37 slightly above the opening levels of $109.29 per barrel. The drop is the first in four days and following a strong weekly drop last week despite the gains as crude ended lower by 2.8% with the strong slump last Monday and Tuesday.
The market was weighed last week by fears over the global economic recovery, tightening policies by central banks, and fear of high prices from dampening growth and demand. The sentiment was already weak and with comments from Saudi Arabia on supply the market was pressured further.
Saudi Arabia’s Oil Minister Ali al-Naimi said yesterday that the “market is oversupplied” weighing further down on crude. Saudi Arabia is the biggest oil exporter and already pledged to compensate for all the losses for crude supplies amid the unrest in Libya that broke-out mid-February.
The market was supported by more factors that just the adequacy of supply and demand as the uncertainties played a major role in pressuring crude prices high. The outlook remains positive as the underlying global recovery gathers more momentum, but for now, the fragile state of the recovery might surely be dented with high crude prices and inflation, which in role should prompt crude correction to start for the market to be balanced with its fundamentals.
Heavy fears are shadowing the market with Europe’s debt crisis back center stage, and that is further downside pressure on an already expected thinning trading this week and gradual drop of volumes with the long weekend ahead and Easter Holiday.
With the lack of major fundamentals today the focus is on Europe and the debt crisis. Investors fear Greece debt restructuring despite the nation’s confirmations that they will not be heading for this move. On Friday Greece announced new austerity measures to bring the deficit down to target yet still seemingly did not convince the market.
Also fears over the new Finnish parliament increased fears over the nation’s possible block for Portugal’s request for EFSF loans, as the bailout for Finland needs to be approved from the parliament opposed to needed government approval from the other euro members, and for the bailout to pass the all 17-nation agreement is needed to provide the nation with the bailout.
High volatility is expected this week and the downside pressures are growing on crude and with continued four-hour closing below 108.60 this week the bearishness is favored for the week targeting areas as far as 105.25 per barrel.