|News||Crude consolidates after yesterday's rally|
|Analysis||Crude oil gained for the third consecutive day as pessimism eased in Europe after good confidence data in Euro zone and Germany. However, crude gain upside momentum also form encouraging earnings from U.S. companies reflecting the strong performance among companies despite the weak recovery pace.|
Crude oil found a strong support from this earning season as so far companies are releasing strong results pushing the sentiment positively. Also, the IMF played a significant role in pushing crude to the upside as the fund raise its growth forecasts to the global economy.
The International Monetary Fund was more optimistic yesterday in its growth forecasts to the global economy, whether to U.S., Europe or Asia, as signs of stronger recovery appeared in the States where it expected that U.S. may grow by 2.1% this year, which supports the global economy to grow by 3.5% this year as well.
However, the IMF eased concerns over Europe and expects that it may just shrink by 0.3% this year, but more efforts should be implemented to fight the crisis, as the ECB’s 1 trillion cheap funding to the banks is not enough to tackle the crisis. Where the fund is not cheerful about Spain and Italy by saying they might fail to reach the budget deficit target this year.
The IMF report was somehow encouraging along with cheerful earnings from big companies, which helped crude to find a way up since the dollar is getting weaker opening the door to the upside, as the U.S. dollar dropped yesterday after the industrial production came worse than expected.
This upside pressure was strong enough to push crude upwards neglecting the API report which showed that U.S. oil inventories added more 3.4 million barrels for the fourth consecutive week, showing that oil demand continue to ease in the world’s biggest oil consumer.
Crude managed yesterday to beat all negative factors and achieve huge gains, where it may be volatile today ahead of EIA report which may show that U.S. oil inventories rose by 1.8 million barrels last week. And we may see a downside correctional wave today to correct yesterday’s big rally.
Crude oil opened today’s session at $104.26 and fluctuates heavily among a tight range between a high of $104.47 and a low of $104.11 a barrel, and it is currently trading around the opening level.