|News||Crude hikes since the opening of the session|
|Analysis||Crude oil is rising today correcting yesterday’s losses that derived from stronger dollar amid uncertainty in Europe and mainly U.S. which showed a conflict between members of Super committee to reduce the budget deficit by $1.2 trillion, as failure in the committee to reach an agreement spurred uncertainty in markets.|
Crude rose today from the opening price at $97.00 to reach a high of $97.93 after it recorded a low of $96.53, where it is currently trading positively around $97.76 amid declining dollar.
Crude declined yesterday after the committee failed as expected to reach an agreement into how they would cut the budget deficit, but it doesn’t mean that cuts not going to happen, as automatic cuts will be implemented, but the problem is that these automatic cuts may hurt consumers on a way or another.
The failure of the committee to reach an agreement on budget cuts, has raised the uncertainty in U.S. markets and global markets as well, which gave some support to U.S. dollar demanding it as a safe haven amid this economic situation, where it rose significantly yesterday pushing crude oil downward.
By the same token, rating agencies Moody’s and S&P relieved global markets in somehow, as they announced that there would not be an immediate downgrade on U.S. credit rating due to the failure of the committee, where Fitch rating agency said it may put U.S. AAA rating into a negative outlook.
Although, crude found some positive momentum today when the United States imposed more sanctions on Iran which considered the second largest producer in OPEC, and these sanctions may hurt the Iranian oil production and any country or company that is working with Iran in business or oil.
Oil rose today backed by the U.S. and its allies’ sanctions on Iran which would reduce the global oil production, despite all news that global oil demand would decline in the future, but less oil supply have raised its value.
Nonetheless, the World Bank has cut its growth forecasts in eastern Asia amid declining exports in these countries caused by slowing global growth and deepening debt crisis in Europe, as major global economies are struggling, but on the other hand, the bank slightly raised its growth forecasts in China this year to 9.1%.
Uncertainty remain high in Europe, as Greece is struggling to get the sixth tranche of last year bailout by 8 billion euro, but the democratic party leader refused to sign a document that ensures his willing to implement austerity measures that demanded by Troika, which may delay this payment despite the country’s urgent need of this payment to meet its short commitments.
On the other hand, Moody’s credit rating agency warned that France’s credit rating is at risk and it may put it on the negative side amid high borrowing costs and slowing growth in the whole continent.
All in all, crude will be so volatile today indeed ahead of U.S. fundamentals which will be fully awaited by investors, as GDP figures that U.S. will announce will lead the global pace of growth with no doubt, where it is expected to maintain this growth pace in the third quarter at 2.5% as before.