NewsOil holding some grounds despite the strong dollar
AnalysisCrude oil future contracts rose strongly yesterday and the pressure keeps pushing oil prices to the upside on easing fears over the outlook for the global growth and the pace of recovery in the United States in the second half of this year.

The rise in the US factory orders yesterday helped in sustaining the gains, as it signaled that manufacture industry is recovering following the ISM manufacturing expansion last week, which also, pushed oil to the upside.

Crude oil is still holding the strength somehow despite the stronger dollar. Crude opened today’s session at $96.96 a barrel to reach so far a high of $97.76 and a low of $96.77 where it is currently trading around $96.84 marginally lower. The dollar is building on yesterday’s gains opening today at 74.64 and reached a high of 74.64 and a low of 74.64.

The US employment data may follow the factory orders and rise, as it is expected to show an improvement in the sector which will have a positive effect on the U.S. outlook and will remain the main focus for oil this week that can either sustain the rally or berate it.

Also, the EIA report may show a drop in the U.S. stockpiles which is keeping upside support for oil prices, especially after Barclays yesterday increased its 2012 forecasts for Brent and U.S. benchmark West Texas Intermediate crude prices.

Asian stocks rose reversing from the earlier declines where the Chinese banks shares declined after the share sales and warned that the credit outlook for China’s banking industry could be lowered, but, China’s services industries expanded at the second-fastest pace this year as new orders and employment climbed.

The U.S. will release the ISM Services for June at 14:00 GMT, and expected to ease to 53.7 from 54.6 in May, but if it shows an increase it will give us a sign that the US economy is really improving which will affect oil prices positively, as the United States is world largest oil consumer.

Portugal has joined the Greek woes which is already dominating the markets as Moody’s Investors Service cut Portugal’s credit rating to below investment grade on concern that the country will need to follow Greece in seeking a second international bailout as it will struggle in the coming years to access capital markets for funding.

The debt crisis will be the main pressure on oil again today with the fluctuations and volatility expected as investors assess the outlook for the debt-laden euro area and a stronger dollar and risk aversion might be the early end for crude’s rally this week instead of waiting till Friday’s confirmation from the jobs report.