NewsEIA Report
Previous-1.1 million barrels
Forecast0.5 million barrels
AnalysisNegative factors that affect crude oil have increased to push crude further to downside erasing all of gains that recorded yesterday, as the HSBC China PMI manufacturing expected a contracting sector this month, which added more negative pressures on crude along with yesterday’s pessimistic data from U.S.

Crude oil is volatile today but it is affected by negative factors that pushed it the downside from the opening price at $97.83 to reach a low of so far at $96.38, where it recorded a high of $97.89, and it is currently trading negatively around $97.00.

Crude couldn’t find any positive factors that would give it some upside momentum, where the world’s second largest economy is going to contract this month as HSBC flash China PMI manufacturing showed today, which put crude on the downside rally along with global stocks.

Also, fears from Europe had increased as the debt crisis is deepening despite all efforts that leaders made in order to avoid contagion risks, but unfortunately it is happening now as borrowing costs in the region is rising on all debt laden nations and it didn’t exclude bigger economies such as France, which faced a high borrowing costs as well.

Also, France is under threat from a downgrade move from rating agencies, as Moody’s took the lead by warning France that it may face a negative outlook if things continued this way, as borrowing costs are rising and challenges that face the French economy increased in the past period amid deepening debt crisis.

Fears and concerns in Europe are affecting the Euro negatively, especially that crisis is not limited at one country, where it is spreading in the whole continent, France credit rating is under threat as we said, and the French bigger role in bailout plan for Dexia bank had increased fears over its rating.

All these news had put negative pressure on Euro taking it to the downside, which eventually considered as a positive factor for US dollar pushing it to six-week high, putting more negative pressures on crude oil as well.

Sine crude is a growth sensitive commodity, it has affected significantly yesterday when U.S. economy pace didn’t grew as expected as figures showed yesterday, to slow from 2.5% to 2.0% in the third quarter as the second reading showed, as the U.S. economy has a main role in the global recovery pace and a slowing economy in U.S. would hurt the recovery indeed.

On the other hand, the EIA report also is pushing crude to the downside, as it is expected to show a rise in U.S. crude inventories last week by 0.5 million barrels, unlike previous week which showed a drop in the stockpiles by 1.1 million barrels.

Volatility will be evident in crude trading today, but the main trend for today would be to the downside amid signs of slowing global growth and weakening major economies amid deepening debt crisis in Europe, but the volatility will dominate the trading ahead of U.S. data and European data as well.