|News||Nothing can stop oil|
|Analysis||Crude oil surged significantly yesterday reaching to the highest in 9 months amid rising fears over global oil supplies with focusing on Iran-west situation, along with the weakening dollar which is providing crude with an upside momentum neglecting all other negative factors that would affect the commodity.|
Crude oil rose sharply yesterday neglecting the rising inventories in the world’s biggest economy and oil consumer, as better labor sector in US and encouraging data from Germany helped crude as well in its upside journey.
Crude oil opened today’s session at $108.57 after it rose significantly yesterday, where it recorded so far a high of $108.68 and a low of $108.18, where it is currently trading around $108.39 a barrel.
The EIA reported a rise in US inventories last week by 1.6 million barrels more than expected at 1.3 million barrels, and comparing last reading which showed a declining stockpiles by 0.2 million barrels, actually, this report is used to affect crude significantly, but yesterday, no minor effect was seen on the commodity amid many positive factors that pushed crude strongly upwards.
Looking at the main factor behind this rise for crude, we can say Iran is the generator of this bullish momentum for crude, as tensions between the country and the west is rising and a military intervention is a possibility, also, the United States is taking efforts to squeeze the belt on Iran more, as it is trying to find an alternative source for Iran’s second oil importer India.
We note here that if Iran couldn’t find new customers for its crude if India, China or other major current customers, it may push the country to do what it warned of in the last period, closing the Strait of Hormuz, which we all know what is the consequences for such a move.
An official in the International Monetary Fund said yesterday that a halt of Iran's oil exports to Organization for Economic Cooperation and Development countries could trigger a 20%-30% spike in oil prices.
Amid all these factors that provided crude with a very strong upside momentum, we cannot neglect the effect of weakening dollar which declined sharply yesterday adding more positive momentum to the commodity, as the USDIX declined yesterday from the opening at 79.19 to close the session at 78.63.
We refer to what behind this weakening dollar to optimism in Europe, which had a double effect on crude that future demand in the continent would rise amid signs of recovery, and pushed the common currency upwards increasing the negative pressure on the dollar.