NewsEIA report
Previous4.2 million barrels
Forecast2.5 million barrels
AnalysisCrude oil recovered well yesterday and rose significantly erasing past losses to trade now around $99, amid signs of reaching a deal in Greece to ensure receive the second bailout by 130 billion and avert a default situation, also, the unexpected drop in US inventories by 4.5 million barrels last week as ADP showed yesterday gave oil a bullish momentum.

Crude oil opened today’s session at $98.76 and reached so far a high of $99.40 and a low of $98.58, where it is currently trading around $99.33 a barrel.

In Europe, Greece domestic talks delayed until today and it is widely expected that Greece’s three major parties would agree today on draft that introduce by PM Papademos to ensure having the international lenders’ aid in the second bailout as they said that no bailout will be given to Greece if no effective measures were imposed.

Hopes among investors are seen today especially after a Greek official said that Greece is preparing the final draft of the document, outlining budget and structural measures required by International lenders, which will guaranties 130 billion Euros and avert default, which pushed financial markets and encouraged investors.

On the other hand, the American Petroleum Institute reported yesterday that US crude inventories unexpectedly dropped last week by 4.5 million barrels, signaling that demand in the world’s biggest oil consumer is recovering well amid signs that the economy is getting stronger.

The API report had signaled that the EIA report which expected to show a rise in US inventories by 2.5 million barrels may not be as accurate, where it may show declining inventories as well indicating that demand on crude is rising.

Nonetheless, Goldman Sachs Inc. said that “We continue to expect that oil demand will grow well in excess of production capacity growth, it’s only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand.”

Back to Iran which is the main factor behind higher oil prices, had dismissed the new US sanctions on it calling the sanctions as a “psychological warfare” and said that it was open to “meaningful talks” on its nuclear program, where  Israeli Foreign Minister  appreciates the “very crucial decision” by the U.S. to increase sanctions on Iran.

However, Iran’s parliament member are demanding a plan that would halt the country’s oil exports to Europe before the European Union begins its oil embargo this summer, which increased fears over oil supplies.

Saudi Arabia is trying to halt these fears and increase its oil production to avert overvalued oil prices, as the country said it is prepared to help South Korea to secure “stable” crude oil supplies if the northern Asian country’s imports are disrupted by an embargo on Iran, where it can meet any future requests and extra demand from South Korea for oil purchases.

Also, the US dollar helped crude oil in its yesterday upside rally as it declined yesterday from its opening levels at 79.04 and closed at 78.51.