|News||Crude declines at the start of the week|
|Analysis||Crude oil declines at the beginning of the week despite better manufacturing in China that signals for good recovery pace in the second quarter. However, the commodity remain highly traded due to fears over Iranian oil supplies and better confidence figures from Germany which helped in pushing crude higher on Friday.|
China’s good data was helpful for crude but wasn’t enough to prevent the commodity from declining, as it joined a downside correctional wave with the start of the week after it rose significantly on Friday to trade above $104.00 level.
In fact, China’s HSBC flash manufacturing PMI came better than the previous but still below 50 which means that the sector still shrinking in April, although the People Bank of China announced that inflationary rates are moderating which raised forecasts for easing the monetary policy.
China’s HSBC flash manufacturing PMI reading for April rose to 49.1 in comparison with the previous reading of 48.3.
The downside pressure on crude is due to high uncertainty in Europe after ECB’s president Mario Draghi and other European leaders denied IMF calls to do more to fight the debt crisis, as the outlook for Spain and Italy is dark amid high borrowing costs on both countries renewing contagion fears in the region.
This high uncertainty in Europe is pushing the U.S. dollar higher which is pressuring crude negatively, as the common currency (Euro ) along with other European currencies are getting weaker opening the way for the dollar to achieve more gains.
Crude oil was well supported on Friday by different factors, starting with the third-largest producer in the OPEC Iraq, which stopped shipments from its northern fields due to a fault at a pipeline network in neighboring Turkey. Iraq is one of the key oil exporters in the world as it produced an average of 2.81 million barrels a day last month.
On the other hand, the IMF agreed to pledge more than $430 billion to protect the global economy amid concerns the global economic recovery is slowing. The fund’s managing director said that they are able to protect troubled countries.
Crude oil opened today’s session at $103.77 recorded a high of $103.88 and reached so far a low of $103.12, where it is currently trading around $103.17 a barrel. As the commodity is affected negatively by the stronger dollar which rose to the highest of 79.48 after it opened the session at 79.30.