NewsEIA report
Previous-3.1 million barrel
Forecast-2.0 million barrel
AnalysisCrude oil rose for the second day as investors are expecting a drop in stockpiles after the API report yesterday which showed that the US crude supplies fell the most in six weeks and signs of economic recovery in the US after the release of the US housing yesterday; also signs of US debt-ceiling debate progress implies that the demand will increase in the world’s largest oil consumer, and investors are waiting for the EIA report which will be released later today to confirm yesterday’s report.

Light sweet crude oil opened today at $98.32 a barrel recording the intraday high at $98.90 a barrel and a low of $98.25 a barrel and is currently trading around $98.75 a barrel.

Moreover, the weakening dollar has added more positive support to dollar-denominated commodities, affecting crude oil to record more gains today. The dollar weakened versus the euro and other currencies, as investors are tending towards high-yielding assets, the euro regained some of the losses in the previous sessions after a bond selling by Spain and Greece; the Spanish government sold 4.45 billion euros of 12-month bills and 18-month notes where the selling came just lower than the maximum target yet the average yield was higher than the prior auction. On the other hand, Greece raised 1.62 billion euros from selling 13-week bills with interest rate below the last auction.

The USDIX opened today at 75.15 recording the highest at 75.22 and the lowest at 74.98 and is currently trading around 75.00.

In the United States, after last week’s Moody’s decision on the possibility that it may cut the states credit rating, it brought concerns and fears that it could lead a huge wave of losses across the board and will have a sharp negative effect on the market, but still the agency is awaiting lawmakers in U.S. to increase the debt ceiling, but though they are low on time with a decision to be made by August 2 as the Treasury requested.

Yesterday president Obama said that there has been “some progress” regarding the raise of the US debt ceiling before the appointed deadline which brought some hope into the markets especially after a group of Republican and Democrat senators offered a plan that could revive the US debt talks and a reduction of a long-term deficit reduction in order to avert a default by the US.

Returning to Europe, after the European Finance Chiefs came to no agreement regarding Greece, and the IMF said that it’s not ready to discuss a new rescue package for Greece, the focus turned to the euro area leaders, Greece’s Finance Minister, Evangelos Venizelos said a solution is “attainable” at the summit of European leaders that will be held Thursday in Brussels so they can discuss the financial stability of the euro area. 

The API yesterday reported a drop by 5.2 million barrel in the US crude stock piles which was a larger than expected drop of 1.7 million barrels, investors today are waiting for the EIA report, which will be released later today, and is expected to show a decline in crude oil inventories of -3.1 million barrels compared with the previous decline of 2.0 million barrels, which supported Crude oil to continue the upside journey today.