Fundamental Oil Report (2011-10-19)

By @ibtimes on

NewsCrude is volatile after yesterday's gainsPreviousForecastAnalysisCrude oil rose significantly yesterday after optimistic data from the U.S. and good earnings that improved the market sentiment despite pessimistic data from Europe, which eased hopes over the ability of EU leaders to contain the crisis.

Although, crude oil is trading within a narrow range today as volatility is dominant in markets amid mixed sentiment among investors, where European hopes retreated after Germany doubted the EU leaders ability to come up with a comprehensive plan to solve the debt crisis.

Crude oil futures for December delivery opened the session at $88.50 a barrel and recorded the highest at $88.84 and the lowest at $88.11, and it is currently hovering around $88.46 a barrel.

On the other hand, the rating agency Moody’s always has its continuous role in damping investors’ hopes, as it downgraded Spain’s credit rating by two notches citing the danger of debt crisis that drive borrowing costs higher amid slowing growth in the region, which increased contagion fears and its impacts on the continent; also, S&P was jealous and downgraded 24 Italian banks amid rising tensions and slowing growth.

Further in Europe, Greece is taking more efforts to reduce its budget deficit to meet the requirements of the troika to receive the sixth tranche of last year’s bailout, as Papandreou vowed to announce more austerity measures before the crisis summit that would negotiate the Greek situation and how they will control it and prevent it from default.

Nevertheless, the optimistic good earnings from the United States helped ease the bearishness in Wall Street which added upside support to crude.

Nowadays, investors are looking for the companies’ results amid the earning season, which may have a positive effects on crude if the results came strong and companies are resisting the slowing economic conditions which reflect the performance of the economy in a way or another indicating more demand on crude for the time being and for the future.

Mixed data from global economies left mixed sentiment among investors whether Europe could contain its crisis and find a way to prevent contagion threats, and on the other hand, the fact that slowing global growth will lead into a double-dip recession. 

today, EIA report might show a rise in U.S. crude inventories by 2.0 million barrels which may ease upside momentum on crude, where it showed a rise by 1.3 million barrels last week. 

Still, the main focus will be on Europe waiting for the October 23 crisis summit that would come up with a comprehensive plan for the European debt crisis after G-20 finance ministers gave EU leaders a deadline on the summit to find a plan to solve the crisis, but Germany damped hopes as we said leaving investors bewildered until the summit.

Join the Discussion