|News||Crude inclines at the beginning of the week|
|Analysis||Crude oil continues in the upside rally that begun before, where it is rising since the openening of today’s session above $101 level, backed by hopes that European leaders would act seriously and decisively to contain the crisis, and also supported on the possibility of shrinking oil suplly from the Middle East.|
At the beginning of the week, investors are hoping that European leaders would take decisive measures to solve the debt crisis that is spreading all over the region, which is weighing down on growth in the continent and threatens global growth as well.
Oil started the session at $101.27 to reach so far a high of $101.70 and recorded a low of $101.15, where it is currently trading at $101.62, mentioning that crude has already rose above $100 last week when six major central banks took a decision to increase the dollar liquidity between banks, and especially European banks.
Today, the French president and the German chancellor are expected to meet in Paris, as the two leaders are willing put on table headlines for plans to be discussed in the European summit on Friday for deeper fiscal integration in order to stem the deepening debt crisis, as it is widening quickly to threat big economies such as Italy and Spain.
Also, investors saw that the Italian PM is taking the appropriate steps so far and he is wishing to control the huge national debt, as he presented a new austerity and growth plan for his of by 30 billion euros and it passed it, and he will present the plan in front of the Italian parliament which is widely expected to approve the plan.
Nevertheless, crude is beating all negative factors that could affect it, as despite the discouraging data from China that showed a slowing service sector in the world second largest economy, which signaled that the economy is cooling down amid slowing growth in the global economy, as China must act quickly and back off its monetary stance which is so tightened.
One of the major factors that affect crude positively and take it to the upside is the expected shrinking supply in the Middle East, as the situation is getting worse especially in Iran, which considered OPEC’s second producer, and no oil production from Iran would affect global crude supply significantly and drive oil prices to higher levels.
Hopes are covering the sky of Europe as the leaders of 27 countries would meet on Friday to put on new decisive plan to solve the debt crisis in the continent and prevent it from spreading, where investors are eagerly waiting for that date.