|News||Oil joins an upside rally after yesterday's decline|
|Analysis||Crude oil retreated sharply yesterday as the EIA reported an unexpected rise in US inventories which indicated a low demand and rising supply in world’s biggest oil consumer, also, the strengthening dollar has pushed crude oil to the downside, however, crude remained trading in high levels above $101.00.|
Today, crude is struggling to erase yesterday’s losses which achieved after the EIA report showed that the U.S oil inventories increased by 2.2 million barrels from the previous week. At 329.7 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year, where distillate fuel inventories increased by 3.2 million barrels last week and are in the middle of the average range for this time of year.
Crude oil opened today’s session at $101.28 and reached so far a high of $102.25 and a low of $101.28, where it is currently trading positively around $101.99, and it is expected to continue this upside rally to cover yesterday’s losses but volatility will control the commodity indeed.
The rise in US inventories has added negative pressures on crude oil as it considered an indication for sufficient supplies in the world’s biggest economy, along with the strengthening dollar have managed to ease pressures on oil from the Iranian issue BUT all these factors are considered temporary and would never erase all the pressure from the Iranian issue.
Nowadays, Iran is the main factor behind pushing crude above $100 levels, as the issue of US, EU and their allies, is threatening the crude supply from OPEC’s second biggest producer, where Iran warned that if such a thing happens it will close the Strait of Hormuz and stop any oil flow from the Strait.
Yesterday, the Turkish Foreign Minister delivered a message to Iran from the West, urging Iran to back off its stance and to negotiate over its nuclear program, where Iran's foreign minister joined Turkey’s minister and suggested Tehran was interested in renewing negotiations which stalled a year ago, as he said at a press conference.
On the other hand, reports showed yesterday that the Organization of Petroleum Exporting Countries is likely to increase its output of crude this month in order to meet winter’s demand for heating fuels, which erase some of the fears yesterday over oil supplies taking crude down but it remain above the critical levels.
The ADP employment change showed that the US private sector added 325 thousand jobs in Dec, from 178 K expected, while the initial jobless claims fell last week more than expected to 372 K from 381 K previous, which is considered an indication for a good Nonfarm payrolls report today.
Volatility will be the status of crude today amid a lot of major fundamentals that would be released by major countries, where investors are eagerly awaiting for the nonfarm payroll which will show us the performance of jobs’ sector in the world’s biggest economy, and it will have a major effect on global markets.