|News||Crude is trying to recover from yesterday's losses|
|Analysis||Crude oil fell sharply yesterday on reassurances from Saudi Arabia that it is ready for a quick increase in its oil output up to 25% countering the effect from declining U.S. inventories which shrank by 1.4 million barrels according to API report.|
Today, the commodity is trying to recover yesterday’s huge losses supported mainly by the weakening dollar, and the API’s report which may be confirmed by the EIA report today, which may show a drop in U.S. stockpiles unlike the expectations of 2.2 million barrels rise.
Volatility could be strong today ahead of the EIA report where investors are confused at the current time as all efforts from global heads are to halt the general rally for crude due to its negative impact on the global economy, but it still overpriced especially after fears over Iran’s oil supplies eased.
Among global efforts to reduce oil prices, Saudi Arabia played a significant role in this equation, as it said that it can increase oil production by 25% immediately if needed, seeking to allay the concern over supplies that has driven oil prices to the highest in three years.
In fact, Saudi Arabia increased production to 10.047 million barrels a day in November, indicating that the country has the ability to do such a move as it has the excess of 2.5 million barrels a day. The country which is the world's biggest oil export could produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April.
In general, Crude will show its strong inversely relation with the U.S. dollar ahead of EIA’s report, where the dollar is getting weaker removing the downside pressure that helped in pushing the commodity downwards yesterday.
In Europe, focus started to move out of Greece especially after the country received 7.5 billion euros as a first tranche of its 130 billion euro second bailout which was approved by both euro area members and IMF last week.
Eyes are headed today on UK as the Chancellor of the Exchequer George Osborne will announce its 2012 budget plan with high expectations that he will cut the income tax on a specific category and show how the budget deficit is going to be in order to sustain the country’s top debt rating, however, economists see a possible downgrade for UK’s rating even after today’s plan.
Crude oil opened today’s session at $106.37 recording so far a high of $106.85 and a low of $106.30, where it is currently trading around $106.70 a barrel.
We can than here the weakening dollar which is the only bullish momentum provider for crude oil, as it declined sharply to reach so far a low of 79.30 from the opening level at 79.62.