|News||Crude oil beats negative factors and proceeds with the upside rally|
|Analysis||Crude oil continued yesterday’s rally as it reached $101 levels amid hopes in Europe and the bank of Japan’s unexpected move which encouraged financial markets, as the bank increased its asset purchase program by 10 trillion Yen in a way to help and support the economy, which pushed the commodity sharply upwards.|
Crude oil opened today’s session at $ 100.71 and recorded so far a high of $101.16 and a low of $100.37, where it is currently trading positively around 100.92 a barrel.
Bank of Japan started to ease the imposed monetary policies after the nation's exports dropped and the economy shrank by more than economists' forecast in the fourth quarter, where it could support the economy and make it grow in the coming period.
Mixed factors are seen across financial markets as the Japanese move has pushed the market and improved the sentiment, however, the sentiment today is worsening after Moody’s move yesterday that hit the sentiment and raised the uncertainty.
The sentiment is mixed now after Moody’s move downgrading the credit rating of six euro nations, and warned of a possible downgrade for France, UK and Austria’s top ratings, stating that the “increasingly weak macroeconomic prospects” as well as “the uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework’’.
But as we can see, despite this move that raised the uncertainty and increased fears, but investors are still encouraged and see a glimpse of hope in Europe neglecting the agency move and all other negative factors.
We must notice that the main factor behind this optimism that has been able to counter these negative factors is Greece’s approval on austerity plan that would secure a second bailout, and tomorrow it will be translated as markets hope into real measures by Finance ministers’ meeting by securing the bailout for the country.
We can mention here about other factors that provided an upside momentum to crude along with those who we referred to, as fears are increasing on global oil supplies where tension in the Middle East is worsening a day by day as Israel accused Iran and its ally, Hezb-allah, of being behind two bomb attacks.
These accusations could be the spark of a military intervention between both parties and would seriously hit the crude supplies and might not be sufficient to meet global oil demand despite most of think tankers expected a lower demand on crude oil, however, any war between Iran and the west will cause to a much high oil prices.
In general, crude oil may be volatile today but it is most likely would stay above the psychological level at $100 after it breached it yesterday and closed above it, which will enhance crude with bullish momentum in the coming sessions.