|News||Crude rising amid improving sentiment|
|Analysis||Crude oil is trying to correct some of yesterday’s losses as it gathered momentum on better sentiment in markets as EU summit came up with some solutions for the region’s crisis, although, Greece’s crisis remain stuck so far.|
After yesterday’s losses as we saw how crude lost its upside momentum due to uncertainty that was high among financial markets, but European leaders supported markets by announcing some solutions for major problems in order to tackle the crisis.
Crude oil opened today’s session at $98.93 and recorded so far a high of $99.82 and a low of $98.83, where it is currently trading around $99.82 a barrel.
EU members have made an agreement on tougher budget rules in yesterday’s summit, only UK and Czech Republic refused to sign the fiscal compact which makes countries prone to sanctions in case of any breach of budget limits starting from March.
Also, European leaders agreed to launch the permanent European rescue fund, in July this year to finance and bailout indebted nations in the region, yet there was no expansion in its 500-billion-euro capacity.
These measures which considered supportive to the region and a step forward to halt the deepening crisis and support growth, pushed markets upside and improved the sentiment that was badly hit before announcing these measures, which pushed crude to the upside correcting some of its losses as stronger economy means stronger demand on crude and higher prices as well.
Under these circumstances, the US dollar declined today erasing some of yesterday’s gains as the uncertainty eased and the sentiment improved significantly, which pushed the Euro and added negative pressures on the dollar.
On the other hand, Iran continued in its supporting side for crude oil after it warned that it will cut its oil exports for Europe before the Union starts its Iran’s oil embargo in July which raised fears on crude prices by global organizations, as OPEC’s secretary said that EU's embargo on Iranian oil exports will add upward pressure to oil prices.
However, China and Japan are struggling nowadays to find crude provider, as after US urged the two countries to ban Iran’s crude exports, Sudan has halt its oil production as well, where China and Japan are the biggest consumer of Sudan’s oil, as South Sudan has shut down its oil output around 350000 barrels per day, as it and Sudan row over their oil industries, borders and debt.
Nonetheless, the Energy Information Administration (EIA) said that US oil imports rose 1.5% in November from a year earlier to 8.826 million barrels a day, mainly imports rose from Canada, as its imports from Canada rose 19.5%, which considered the bigger oil provider for the United States.
Many challenges are seen that face crude market, but all are considered positive for the commodity, however, it might proceed its upside rally amid these supportive factors from Iran and others that threats oil supplies, especially if Europeans find a way to convince markets that they are capable to handle the region’s crisis, oil prices will skyrocket if such a thing happens.