|Previous||-3.4 million barrels|
|Forecast||1.4 million barrels|
|Analysis||Crude oil is so volatile today after yesterday’s losses which kept crude below $100 levels, but the EU-US embargo continued to affect crude and push it to the upside. Today, the EIA will release it last week report for US oil inventories and a rise in inventories is expected, which will keep crude volatile ahead of the report.|
Oil has declined yesterday affected by many negative factors from here and there, especially in Europe which used to be the main factor that determine crude’s direction, since crude is a correlated commodity with growth, and Europe’s meetings are showing signs on the outlook for European growth.
Crude oil opened today’s session at $99.07 and recorded a high of $99.33 and a low of $98.84, where it is currently fluctuates around $98.93 levels.
On the other hand, the American Petroleum Institute reported yesterday that crude supplies rose by 7.3 million barrels last week, while distillate inventories dropped 2.5 million barrels, which is an unexpected number and signaled lower demand in the world’s largest economy.
Although, the EIA may report a rise in US inventories but less than API’s report, as the EIA may show that crude inventories rose by 1.4 million barrels last week compared with the previous report that showed a huge drop in inventories by 3.4 million barrels.
Again and again, Iran remained the biggest factor behind higher oil prices that gives oil upside momentum despite growth fears in Europe, especially after the EU followed the United States and declare a decision of banning Iran’s oil exports starting from July.
This U.S. ambition to pressure Iran to stop its Nuclear program is driving crude prices higher, especially that Iran threatened to close the Strait of Hormuz.
South Korea has imported 20% more of crude oil from Iran in 2011 than in the previous year, where South Korea is the world’s fifth largest oil importer, but now, it will have to satisfy the United States and ban Iran’s oil.
In general, the International Energy Agency (IEA) expects crude prices to reach $247 a barrel by 2035, almost double the $133 estimated by OPEC which predicts that oil will remain between $85 to $95 a barrel by 2020. The EIA said that continued development of tight oil and ongoing development of offshore resources in the Gulf of Mexico in the coming years will push U.S. crude oil production to 6.7 million barrel a day in 2020.
Volatility will be so high today ahead of major data from major economies especially Europe and U.S., as the United Kingdom will release its advanced reading for 4Q GDP which is expected to show the return to recession with 0.1% contraction, where investors will be eagerly awaiting as well for the EIA report, and FOMC’s rate decision.