Crude is still getting well support by the ever depreciating dollar, which combined with supply disruption and geopolitical fear led crude contracts for April's settlement to set a new record high for the black gold at $103.05 per barrel though profit taking at the end of last week's session took the contract to close at $101.84 shedding 75 cents the contract traded throughout the day well above $100 mark as the lowest was set at $101.36 per barrel.
The upcoming Wednesday OPEC meeting is the story of the week, as now expectations still roam that the organization is unlikely to cut production levels as previously anticipated, after the record levels oil is hovering about; the sentiment within members have changed as previously they were worried about the change in weather as it gradually drifts from winter to summer and the effect that bestows on demand, as seasonally it drops which was why they in the first place intended to cut, adding to very much adequate inventory levels for consumer nations, especially the US, was a clear indication of sufficient supply at the time.
Nevertheless, despite global calls on the organization they entirely ruled the expectation of enhancing production just in order to settle the market, were they see that is a result of speculative intervention seeking profits and hedging against inflation, and not the result of supply and demand imbalance.
Now, the dollar is still riding the rollercoaster, and managing still to sink to records low against major, especially what we are seeing against the euro and the yen which in its case is a clear indication of risk aversion, as investors flee volatile equities especially those in the US and we might then see further injected funds into crude markets, adding to the dollar's weakness with the upcoming expected feds cut and the economy's recession.
Projections regarding the headings of crude is blurred more than ever, fundamentally speaking after this week the market should start settling as the pinch of dampened demand from the US starts to sink while geopolitical tension from Iraq, Iran, Nigeria, and Venezuela start to ease, in addition to supply problems, especially from Ecuador after the pipeline burst last week gradually head back to normal output capacity.
While market participants' expectations are seen heading towards higher oil prices as more funds are poured into long positions rather than short and noting the effect investors have on oil prices it is more powerful than that on analysts as they are the ones who led us to those levels in the first place, until the convection sinks in and traders see the end of this upside wave oil prices will still be pursuing new records high. As of today till 8:30 GMT oil was little changed since the begging of trade opening at $101.63 setting the low close at $101.45 while the highest traded was of $102.20 per barrel, is now hovering near $102 levels and are up nearly 25 cents.