NewsCrude continues the upside rally
AnalysisCrude oil rose significantly yesterday backed by many positive factors that pushed crude to high levels that couldn’t reach from more than five weeks, as the US dollar declined sharply which added upside momentum to crude, and the tension increased over the Iranian oil which threatens global oil supply.

Iran is the main factors behind the significant rise in crude oil, as the situation remains critical over the Iranian oil which may face sanctions from US, EU and their allies, where the Iranian government warned if such a thing happens it will stop oil flow from the Strait of Hormuz.

The US dollar is the second major factor that pushed crude strongly to the upside, as it retreated sharply which added positive pressures on crude, as hopes from Europe are rising at the beginning of the year that leaders would implement new tough measures to halt the widening debt crisis.

Crude oil opened today’s session at $102.97 and recorded so far a high of $103.08 and a low of $102.48, where it is currently fluctuates heavily around $103.00.

On the other hand, the Federal Open Market Committee announced the minutes of last meeting, and signaled that the bank is taking new approach, as it will announce the first forecasts after the Jan. 24-25 meeting of the Committee, according to minutes of the Dec. 13 gathering released yesterday, which may boost economic growth by delaying expectations for an increase in the benchmark rate, which has been kept close to zero since December 2008.

Number of FOMC’s members indicated that the current economic conditions could warrant additional policy accommodation, where any additional actions would be more effective if accompanied by enhanced communication.

Many positive fundamentals released yesterday from major economies which encouraged investors to go to high yielding assets and commodities, where crude was the biggest gainer as it benefited from the optimism in markets along with the Iranian issue which kept crude up here.

In the US, the ISM manufacturing rose to 53.9 from 52.7 in Nov, while the PMI manufacturing  in UK for Dec. rose to 49.6 from 47.7 previous, and the unemployment in Germany unexpectedly fell in Dec. to 6.8% from the previous 6.9%.

And in Greece, the government warned that the country would have to leave the euro if it failed to complete the details of its second bailout, where more austerity measures may need to be implemented.

Crude oil fluctuates heavily today after the huge rise it achieved yesterday, which considered a normal and expected reaction, but where it could take crude?,  this is the important question, as it may mildly decline to retrace yesterday’s bullish movements, but it must remain above the critical level $100.