NewsCrude joins the correctional wave
AnalysisCrude oil finally found a way to incline amid this correctional wave that spread in global markets, where the main factor that gave oil upside momentum was the EIA report from U.S. yesterday which showed a massive drop in U.S. inventories by 6.2 million barrels, on the other hand, China’s move to ease its monetary policy was encouraging.

Crude oil opened today’s session at $95.78 where it recorded a low of $95.61 and it rose so far to reach a high of $96.83, where it is currently trading at $96.50.

Crude fell sharply yesterday on fears from Europe and high uncertainty around the globe, but it jumped into the correctional wave that seen in markets due to several factors that considered positive signs, where it is trying today to erase losses that achieved yesterday.

The EIA report which was the main factor that gave upside momentum to crude after it reported unexpectedly a massive drop in U.S. crude inventories, which indicates a strong demand on crude despite a weakening economy.

 The EIA report showed that the U.S commercial crude oil inventories decreased by 6.2 million barrels from the previous week, where it was widely expected that it will show a RISE by 0.5 million barrels, but it is closer to the upper limit of the average range for this time of year. Distillate fuel inventories decreased by 0.8 million barrels last week and are in the lower limit of the average range for this time of year.

Crude rose today despite the hint from S&P that the Japanese credit rating is Vulnerable to be downgraded amid weakening economy, and it hasn’t made any progress in tackling the public debt burden, where it is getting worse every day.

Nonetheless, the Chinese news that the country cut the reserve ratio for more than 20 rural credit cooperatives nationwide by half a percentage point, as it is considered also a sign that the country is willing to suggest more easing plans ahead and it may ease its monetary policy.

The correctional wave in markets is neglecting the European debt crisis, and all pessimistic data from the continent, amid all facts that contagion risk is materializing as borrowing costs are rising to high levels, and Euro area members’ rating is under threat from a downgrade by rating agencies and especially S&P which indicated this thing.  

But, the main reason behind the volatility that is dominating global markets is the absence of U.S. which is celebrating its thanksgiving holiday, and all bids from the country on electronic trading will take place tomorrow, but today will be empty from any bids from U.S, which will leave global markets so volatile.