|News||Crude trending lower on signs of slowing growth|
|Analysis||Crude oil continued the move south this morning following yesterday’s losses as investors focus on downbeat signs signaling slowing growth and global recovery.|
Crude oil futures for June delivery were trading to the downside and currently hovering lower by nearly 0.7% around $112.73 per barrel recording the high of $113.19 and the low of $112.68 per barrel. The contract ended yesterday down by 0.4% to settle at $113.52 recovering from the low reached at $110.83.
Fears over the pace of the recovery is worrisome for investors that remain skeptic over crude’s capability to continue the upside move amid the underlying demand and supply fundamentals. Manufacturing recovery was of the first sign of ongoing growth and this week we saw slowing expansion in China’s manufacturing sector followed by the US offsetting the positive effect of European expansion.
The market was also troubled with the news of Bin Laden’s death. Surely if the news of his death signals the end of war and stability across major economies it would pressure crude lower, yet retaliation for the death of Osama was promised and many are skeptic over the coming move for the US and accordingly the risk premium from the war against terror was not fully discounted yet from crude amid high uncertainty.
Also, the tension in the Middle East has not come to an end and the death of Muammar Qaddafi’s son still did not affect the ongoing fighting in Libya, a major oil exporter.
The outlook for growth will still be determined with the flow of fundamental this week and most importantly the US jobs report.
We need to keep an eye on greenback as a strong comeback will be pressuring on oil gains. The dollar index today moved higher to record the high of 73.21 from the low of 72.91 and now trading positively around 73.12.
High volatility will prevail today with eyes on the API supply data today ahead of the EIA tomorrow that is expected to show further rise in supplies that will keep crude pressured south.