|News||Crude is volatile ahead of heavy fundamentals from Europe and U.S.|
|Analysis||Crude oil holds its grounds and hovers around the opening level, as heavy fundamentals are on the queue which triggers volatility to the market, where we can see balanced factors that affect crude keeping it with no specific direction.|
The black gold opened today’s session at $103.10 and continued to trade among tight range between the high of $103.24 and a low of $102.64, and is currently hovers around the opening level.
Crude managed yesterday to erase all early losses and even achieved some gains after the world’s biggest economy and oil consumer released encouraging data that helped the commodity to soar despite the pessimism in Europe.
As we saw the American retail sales slightly declined unlike the expectations which were totally negative and pointed to a huge drop in retail sales. However, the better than expected retail sales during March helped the commodity to erase previous losses and achieve some gains, especially when the U.S dollar dropped sharply.
In general, we can see volatility covering financial markets due to heavy fundamentals that will be released today whether from Europe or from the United States. As for Europe, the downside pressure is obvious from the region as borrowing costs rose significantly on Spain and other countries such as Italy.
The market speculate now that Spain could be the next victim for the crisis, as the country faces expensive borrowing costs more than 6% on its 10-year benchmark bonds, which is a little less than 7% that forced Greece, Portugal and Ireland to call for outside aid.
In a step to fight the crisis, Japan will provide $60 billion in loans to the International Monetary Fund (IMF), becoming the first non-European that will provide the fund with new money to contain the euro zone debt crisis, which may encourage other nations to provide money to the fund as well and unite together to help Europe getting out the crisis which weighing down the global economy indeed.
The shaky confidence in Europe amid high borrowing costs and the fear of the crisis to spread is the main downside pressure that push crude to the downside, not to neglect the negotiations between Iran and the west which will be resumed on May 23 as both parties agreed on.
On the other hand, encouraging data from the States brings back the confidence in the market over the recovery pace in the world’s biggest economy, and accordingly helps in offsetting the downside effect from Europe.