NewsCrude oil extending the gains, trimming its previous losses
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AnalysisCrude Oil extended its gains trimming the previous losses when the International Energy Agency announced the release of 60 million barrels from strategic reserves. The gains were bolstered by the EIA report that showed a decline in the crude oil inventories as traders bet US demand maybe strengthening. Yesterday the Greek lawmakers approved the austerity plan and the optimism spread on eased woes over default which also supported crude to rise.

Light sweet crude oil for August settlement opened today at $95.08 a barrel recording the intraday high at $95.41 a barrel and a low of $94.64 a barrel and is currently trading around $94.93 a barrel.

On the other hand, the dollar kept its downward trend especially with the optimism spread across markets after the Greek parliament passed the austerity plan, which was the first step towards receiving the bailout which is vital for Greece. Investors are targeting higher yielding assets, where the USDIX index opened at 74.61 recording the highest at 74.67 and the lowest at 74.25 and is currently trading around 74.37 supporting the case for crude to continue building on the gains today.

The EIA report yesterday showed that US crude oil inventories decreased by 4.4 million barrels from the previous week, at 359.5 million barrels which are still above the upper limit of the average range for this time of year.

Further inventory data today will be regarding natural gas stockpiles. The EIA report for the natural gas storage change will be announced later today and is expected to report an increase by 80 billion cubic feet. The rise in stockpiles are already pressuring gas futures lower since morning which is trading around $4.29 down from opening of $4.31.

As for Greece, the majority of the Greek Parliament voted to pass of the five-year austerity plan that was needed for Greece in order to receive the fifth tranche of last year's 110-billion-euro aid package, which is supposed to be followed by a second bailout.

The focus today is on the second vote on the bill that sees the change in laws and implementation of the five year austerity measures, as a successful vote will probably lead to the fifth installment as soon as next week when the European finance ministers meet in Brussels on the third on July. 

We expect crude oil prices to extend the gains given the optimism that continues to dominate the markets as well as investors who will continue to target higher yielding assets including crude oil. The softer dollar is also further support for crude and likely to help in extending the gains for black gold.