|News||Saudi forced crude to decline along with China's pessimism|
|Analysis||crude oil declines today after two days of gains, today’s decline is led by slowing growth in the world’s second largest economy and oil consumer China along with Saudi’s comments to cover any shortage of supply in the oil market offsetting fears over global oil supplies.|
Crude oil opened today’s session at $103.64 to reach a high of $103.87 and a low of $103.06, where it is currently trading around $103.16 a barrel.
The commodity couldn’t keep up with the current factors and started to decline at the end of the week which may be accompanied by heavy fluctuations as investors would close their positions to prevent any unexpected losses. However, the general trend will be bearish today amid pessimism from China which indicates for a lower demand for oil from the world’s second largest oil consumer.
China’s GDP growth came weaker than expected at 8.1% during the first quarter of the year, the slowest pace since mid-2009, compared with the previous 8.9% and the expected 8.4%, increasing the chances for an additional monetary easing.
The World Bank cut its estimate for China’s growth in 2012 to a 13-year low at 8.2% compared with January’s projections of 8.4%, as global demand on its exports is seen easing while domestic investment and consumption is seen decelerating.
Dear reader, we can see this downside effect from China however, it might be helpful for crude in the coming period, how? If China convinced to open the door for more monetary easing to support its economy, it will encourage investors and it will be reflected positively on crude and help the commodity to hold its grounds.
On the other hand, we can see the downside effect from the world’s biggest oil exporter Saudi Arabia, which determined to bring down high oil prices along with other OPEC members, the Saudi oil minister said Fundamentally the market remains balanced — there is no lack of supply, where Saudi Arabia has invested a great deal to sustain its capacity, and it will use spare production capacity to supply the oil market with any additional required volumes.
The International Energy Agency also said on Thursday that the oil market has broken a two-year cycle of tightening supply conditions as demand growth weakens and top exporter Saudi Arabia increases output.
In general, all the current factors are signaling for more downside movements for crude weather from all factors that we talked about, or by the stronger dollar which also playing a significant role in pushing crude downwards, but volatility will be so high today especially that talks with Iran will start this weekend over its nuclear program.