|News||Volatility with a downside bias is the status of crude oil|
|Analysis||Crude oil fell at the beginning of the week ahead of the EU summit in Brussels today and is eagerly awaited by investors where decisive solutions are supposed to be announced; uncertainty dominates the current market sentiment as fears are rising over the ability of leaders to come up with such a deal.|
Crude oil opened today’s session at $100.00 and reached a high of $100.01 and a low of $98.72, where it is currently fluctuates around $99.05 a barrel.
Today, the EU leaders will meet in the first 2012 summit and continue the fight to contain the debt crisis which halted economic growth and hit the economy hard, hopes are mixed with fears at this time, as investors are demanding more decisive solutions for major problems in the region beginning with Greece which may face orderly default soon if no decisive solution appears.
Fears are mainly surrounding Greece now, where leaders won’t solve Greece’s crisis by giving the country money to avoid default, as the German finance minister warned that the euro zone might not give Greece a fresh bailout unless it can overhaul its state and economy.
The current uncertainty is giving upside momentum to the dollar as the common currency is taking the downside trend and loosing momentum, markets are looking for three solutions for three major problems in the region, the first priority is Greece which until now reached no agreement with the private bondholders for haircuts.
The USDIX that tracks the performance of the dollar against a basket of major currencies opened today’s session at 78.79 and recorded so far a high of 79.22 and a low of 78.79, where it is currently trading around 79.10.
On the other hand, the bailout fund will be discussed in the summit today along with tougher budget measures on 26 European countries; all efforts that will be taken by leaders are to tackle the debt crisis which is getting wider day by day.
Although, crude supplies are worrying nowadays as the Iranian issue remain stuck and growing fears over its oil production gives crude upside momentum, as Iran warned that it would cut its oil exports to some European countries before the embargo of EU on Iran’s oil that starts in July.
Also, not only Iran that raising fears over global oil supplies, but Sudan is joining the team now, as South Sudan’s oil minister said that the county has shut down around 350,000 barrels of daily oil output in a row with Sudan over export transit fees and will only restart after the they reach a deal covering border security and the disputed Abyei region.
Looking for positive signs, the Euro zone will release confidence report today before the summit starts, which if they came good, the sentiment may improve which would push the euro against the dollar and empower crude oil and give it positive momentum.
In general, volatility will be so high today ahead of the summit despite current downside move that dominates market trading due to high uncertainty among investors.