|News||Crude oil struggles around $100|
|Analysis||Crude oil declined sharply yesterday to come below the physiological level at $100 and achieved a daily closing below it, as the European Union said that it will delay its decision of banning oil exports from Iran for six months to ensure countries would find an alternative supply.|
Crude oil opened today’s session at $99.23 and recorded so far a high of $100.17 and a low of $99.09 where it is currently trading around $99.57.
The main reason behind pushing crude above the $100 levels is gone, as the European Union said it will delay the decision of banning the Iranian crude exports for another six months, in order to ensure that several countries in EU such as Greece, Italy and other debt laden nations to find another source of supply that would be enough for its demands.
This delay from the EU encouraged investors that oil supplies would be enough in the coming period, where the Iranian government may not proceed in its threat to close the Strait of Hormuz which mentioned from the government that would do such a thing if sanctions were imposed on Iranian oil exports by US and EU.
Diplomats said that a U.N. nuclear team from the International Atomic Energy Agency will visit Tehran on Jan. 28 to discuss the situation with the country’s nuclear program, where Iran said that it is ready after years of refusal to discuss the team with its secret nuclear weapons.
But on the other hand, the United States said that it is willing to isolate the Iranian central bank and three of largest oil customers Japan, South Korea and China for Iran, getting assurances that Saudi Arabia and other Gulf countries would help to cover any shortage in supplies if they stopped any oil exports from Iran.
Hopes are increasing in Europe that a debt auction from Italy today would have a great results such as yesterday after Spain and Italy sold bonds with low yields comparing to the previous and high demand as well, and it will be support the sentiment if today’s auction comes good as lower borrowing costs on the two indebted countries is considered a step forward for the crisis.
Yesterday, the United States announced bad news over its retail sales, where it unexpectedly dropped in December where expectations that it would rose in the Christmas month, but it dropped to push the US dollar to the downside amid signs of weakening economy which frustrated investors and markets.
The drop in US dollar have kept the upside momentum for crude oil which experienced mixed factors yesterday but the negative ones were stronger than the positive, which forced crude to drop below the $100 levels.
Also, the rate decisions from Europe have gave the common currency an upside momentum against the dollar, as hopes in the continent appeared for a while and pushed the Euro to the upside.