|News||Oil struggles after yesterday's gains|
|Analysis||Crude oil soared yesterday erasing all early losses, after the FEDS announced that it will keep low-near zero- interest rates through 2014, and it will take any easing measures to ensure strong growth in the world’s largest economy, which indicated that oil demand will rise if growth recovered from its current weakness.|
Crude oil opened today’s session at $99.76 and recorded a high of $100.20 and a low of $99.43, where it is currently trading around $99.53.
The Federal Reserve Bank was so supportive to financial markets send it all high, as comments from the FEDS chairman signaled that the bank is ready for a third program of quantitative easing in the coming period if conditions continue to deteriorate, which pushed commodities, stocks and currencies higher, but the dollar has weakened in such news.
However, the FED has cut its growth forecasts which added to assumptions that the bank will need more quantitative easing in the coming period, where it cut unemployment and inflation forecasts as well.
The effect from the FEDS decision has countered the rising US inventories last week, as the EIA reported that U.S commercial oil inventories increased by 3.6 million barrels from the previous week, where distillate fuel inventories decreased by 2.5 million barrels last week and are in the middle of the average range for this time of year.
In Iran, the country re-threatened that it will close the Strait of Hormuz if sanctions from US and EU succeeded in halting Ian’s oil exports, where the IMF said that global crude prices would jump 30% if Iran halts exports in response to sanctions.
Also, the International Monetary Fund said that European debt crisis could push the world economy into recession and a bigger firewall was urgently needed and more decisive measures to avoid the spreading to other nations.
The IIF resumed talks with Greece today after the private bondholders which represented by the IIF, met yesterday to discuss the swap deal between the Greek government, where they will resume talks with the government today in hopes to end the mission and agree on a plan before the leaders’ summit at the end of this month.
Crude oil will be volatile today amid lack of fundamentals but investors will be looking at companies’ earnings which will have a major effect on financial markets, where eyes will be looking for comments from European leaders and waiting for resulted between private bondholders and the Greek government.