NewsEIA report
Previous5.0 million barrels
Forecast3.0 million barrels
AnalysisCrude oil struggles around its opening levels after it fluctuates heavily yesterday where it declined late after the API showed an unexpected rise in crude inventories, to close yesterday’s session around the opening, however, the fears over crude supplies continue pushing crude upwards.

Mixed factors are affecting crude oil which drives volatility high, as hopes are seen in Europe that leaders would announce a comprehensive plan to solve the crisis, though the sentiment is mixed amid declining borrowing costs and a dark picture over the negotiations between Greece and its private bondholders.

Crude oil opened today’s session at $ 101.08 and reached a high of $101.59 and a low of $101.00, where it is currently trading around $101.25.

The American Petroleum Institute (API) said yesterday that Crude inventories declined by 4.8 million barrels in the week ended January 13, where distillates declined by 900,000 barrels, this report is unlike what is expected the EIA would show today, as expectations signal that the crude inventories rose by 3.0 million barrels, the effect from the report has countered the weaker US dollar’s effect on crude.

By looking into the Iranian issue, the Chinese premier has defended China’s oil trade with Iran against pressure from the United States by imposing hard sanctions, where he warned Iran about its efforts to develop a nuclear weapon and warned against potential confrontation in the Strait of Hormuz.

 The Iraqi Oil Minister is the president of OPEC, said I will go to Iran to encourage our brothers to express real and important assurances to the world that everyone is keen to protect the waterways and to protect the process of production and export of oil in the region.

On the other hand, Morgan Stanley expects that tensions and risks would continue to dominate oil market, which forced it to raise its predictions by saying, If tensions escalate into production disruptions, prices are likely to surge materially higher, with the sustainability of the higher price dependent on the duration and magnitude of production disruption,

Yesterday, the International Energy Agency (IEA) cuts its global oil demand forecast for 2012, after global oil consumption fell in the fourth quarter, where it warned that it may cut forecasts further if the world economy maintains its current weak growth, as it said that global oil demand will increase by 1.1 million barrels a day this year, compared to the previous forecasts at 1.3 million barrels a day.

Today, volatility will remain high in oil’s trading ahead of major factors that would affect crude prices, as France is willing to buy 9.5 billion Euros of its long-term bonds after it faced a downgrade few days ago.

Although, the EIA report will be released today and expected to show a rise in US inventories by 3.0 million barrels compared to the previous report that showed inventories rose by 5.0 million barrels, which will lead the volatility high ahead of this report and other factors.