|News||Crude continued its upside journey|
|Analysis||Crude oil continued its upside recovery which started yesterday to cover the previous losses, as the commodity rose sharply and managed to close the session above $102.50 levels which opened the door to achieve more gains today.|
Crude oil opened today’s session at $102.56 and reached so far a high of $103.17 and a low of $102.38, where it is currently trading around $103.02 a barrel.
Crude found a strong support yesterday from ECB’s intentions to intervene in the bond market and force the borrowing costs to decline especially on Spain which faces very expensive borrowing costs, as the bank may buy Spain’s government bonds to halt this rise and prevent the country from calling a bailout such as Ireland, Portugal and Greece.
The market has been supported in general after ECB’s comments as we saw the common currency getting stronger against the U.S. dollar, which helped crude to rise despite other negative factors that could push crude to the downside.
As the EIA reported another rise in U.S. oil inventories in the past week more than expected, signaling for a weaker demand from the world’s biggest oil consumer. The U.S. oil inventories rose by 2.8 million barrels from the previous week. However, total motor gasoline inventories decreased by 4.3 million barrels last week and distillate fuel inventories decreased by 4.0 million barrels last week.
In the EIA report, we saw how crude inventories rose last week, but, the distillate fuel inventories and total motor gasoline decreased offsetting the effect from rising oil inventories and also helped in pushing crude higher.
On the other hand, the comments from FED’s officials helped in pushing crude upwards yesterday as well, as the No. 2 official of the Federal Reserve Bank said that ultra-easy monetary policy is appropriate given high unemployment and the headwinds facing the economy, which left the door open for further easing if needed.
In general, crude would be vulnerable for different factors at the current time ahead of resuming talks between Iran and the west at this weekend, with hopes to find a way and solve all the sticking issues between both side especially on the nuclear program, and if negotiations succeeded, we will see the bear in crude trading.