NewsCrude oil soared after the European plan
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AnalysisCrude oil hikes in today’s session correcting yesterday’s losses, as EU leaders had reached a common plan finally after a long lasting summit, which increased hopes that the Euro zone crisis would be contained with these effective efforts, along with an expected growing economy in U.S.

Crude oil for December delivery retraced yesterday’s decline after it opened the session at $90.92 and reached so far a high of $92.41 and recorded a low of $90.72, where it is currently trading positively around $92.10.

Investors worried yesterday when the summit lasts for too much time to come up with a result, but they did it finally and eased the market pressure that dominate investors’ sentiment, as they announced about a 50% writedown on private sector’s Greek bonds, which reduced the Greek debt by almost 100 billion Euros and made sustainable as the Greek PM said.

Also, the EU summit showed that they would increase the firepower of EFSF to reach around one trillion Euros, which in the eye of investors is enough to support the debt-laden nations and prevent crisis from spreading.

The European plan had met with investors’ hopes for a solution that would contain the Euro crisis, which improved the outlook for the European economy, and since crude oil is a very sensitive growth commodity, it soared after the result of the summit.

Yesterday, crude oil declined after the EIA report showed unexpectedly rise in U.S. oil inventories after a huge drop the week before, as it reported a rise by 4.7 million barrels from the previous week. At 337.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year.

On the other side, hopes are now coming from U.S. which will release its GDP figures today and it is expected to show a much better growth in the third quarter than the previous quarter, after the labor, services and manufacturing sectors had showed a slight improvement in the last period.

The U.S. GDP is expected to grow by 2.5% in the third quarter from 1.3% in the past one, which would significantly support the global recovery train that were modest and lost its positive momentum in the last period amid deepening debt crisis in Europe and slowing growth in U.S. and slowing global growth as well.

In general, signs of fastest pace of growth in U.S. and a plan from Europe that may contain the crisis and support the slowing economy, are supporting crude oil significantly and increasing speculations that future oil demand will rise amid better economic conditions worldwide.

Crude oil may continue its upside direction but with slight upside moves ahead of the U.S. figures that would support crude further more after it been supported by the European optimism, as we may see some kind of volatility ahead of these figures.