|News||Crude oil tries to continue the upside move|
|Analysis||After yesterday’s sharp fluctuations, crude oil is trying to find other factors that could provide the commodity with upside momentum, where it is currently so volatile but the better than expected manufacturing in China is pushing crude to the upside.|
Crude oil fell sharply yesterday on rising oil inventories in the world’s biggest oil consumer and economy as the EIA reported a rise in inventories by 4.2 million barrels beating estimates, but the commodity recovered at the end of the session after the losses.
Crude oil opened today’s session at $106.84 and reached a high of $107.22 and a low of $106.53, where it is currently trading around $107.10 a barrel.
The EIA report showed that U.S. commercial crude oil inventories increased by 4.2 million barrels from the previous week, where distillate fuel inventories decreased by 2.1 million barrels last week and are in the middle limit of the average range for this time of year.
After the world’s biggest economy, USA unexpectedly expanded at 3.0 percent pace in the fourth quarter the FED’s Chairman Ben S. Bernanke downplayed chances for another round of stimulus which strongly powered the dollar and further pressured crude south.
These comment from Bernanke halted any gains recorded yesterday in financial markets and pushed commodities, currencies and other indices to the downside as no stimulus in the world biggest economy is a strong dollar, where it would also be followed by other central banks with no stimulus plans referring how central banks follow the FED in its monetary policies.
However, crude oil found some support today from the world’s second largest economy and oil consumer, China, announced better than expected manufacturing results last month, as the PMI manufacturing advanced to 51.0 in February, compared with the prior month's reading of 50.5, where the HSBC PMI manufacturing advanced to 49.6 in February, compared with the prior month's reading of 48.8.
By looking at the positive factors that affect the commodity, we note here that tension between Iran and the west is escalating and a military intervention is becoming closer, as the United States is warning that it could join Israel in attacking Iran if the country doesn’t dispel concerns that its nuclear program is aimed at producing weapons.
In general, volatility will be so high today ahead of the EU summit which will start today till tomorrow, where leaders would discuss significant problems in the continent focusing on Greece and how to enforce the firepower of Euro zone temporary and permanent funds.