Fundamental Oil Report (2012-04-11)

By @ibtimes on

NewsEIA reportPrevious9.0 million barrelsForecast2.0 million barrelsAnalysisCrude oil tries to recover from yesterday’s huge losses which achieved amid rising fears over Europe and weather the continent will be able to help its debt-laden nations or not. Also, the biggest hit for the commodity was the unexpected rise in U.S. inventories according to API.

Crude oil opened today’s session at $100.87 to reach a high of $101.65 and a low of $100.83, where it is currently trading around $101.11 a barrel.

The better sentiment in Europe today is pushing crude slightly upwards to cover some of yesterday’s losses, as the negative impact from U.S. jobs report that pushed the European market downwards vanished and the market is looking for other factors.

Crude oil declined sharply yesterday amid lingering fears over Europe with focus on Spain which may be not able to get out from the debt hole and might be the next crisis’ victim after Greece. As the country suffers again from higher borrowing costs amid this cloud fear that covers the sky of Spain, where PM Mariano Rajoy said Spain’s future is on the line in its battle to tame surging bond yields.

Among this downside pressure, we can sneak to see the API report which reported an unexpected rise in U.S. oil inventories by 6.6 million barrels in the week ended in April 6, much more than the 2.1-million barrels that were expected, U.S. Crude inventories rose 18 million barrels over the last three weeks.

This report added negative pressure to crude and forced it to decline below $101.00 level, supported as well from fears over Europe and its crisis which weighed on its common currency and pulled it lower against the U.S. dollar.

On the long run, the International Monetary Fund (IMF) said that it expects oil prices and other commodities to decline this year and next amid a fragile global economic outlook, but warned that sizable threats to world growth could force for more losses.

The IMF also said a sudden shortage of crude-oil supplies would send prices upward, but the ensuing slowdown in global growth could lead to a decline in the prices of other commodities, as the global outlook...is pretty grim still.

The U.S. Energy Information Administration (EIA) also confirmed the IMF’s talk after it cut its forecast for world oil demand growth for 2012 and 2013, while raising the forecast for non-OPEC oil output.

A sign that may confirm the IMF’s comments as well, China’s trade data showed that net crude imports fell 6 percent in March and overseas purchases of all goods missed economists’ estimates, signaling lower demand from the world’s second biggest economy and oil consumer.

In general, we may see an upside momentum on crude but it will be limited and related to the dollar’s movements since the economic agenda is empty in Europe and it may fluctuates ahead of the EIA report which is expected to show a rising inventories by 2.0 million barrels, but after the API big rise, we expect more added inventories than that.

Join the Discussion