Crude oil posed for the third consecutive daily drop
Crude oil futures started the day in Asia on Tuesday today with heavy volatility and managed to move slightly higher in a correctional move on the back of the weak dollar before it is expected to move further to the downside today. Crude oil futures for July settlement are currently trading around $98.87 from opening levels of $98.75 a barrel. The contract so far recorded the high of $98.97 and the low of $98.32 a barrel. The mixed sentiment and the slight upside correction seen this morning follows the losses in the past two days and in range-bound trading ahead of the OPEC meeting scheduled tomorrow in Vienna. The contract yesterday fell as much as 1.6% to settle around $98.76 a barrel. Crude's gains are merely correctional as the contract is expected to continue the bearishness, especially with steady trading below $100.70 and preferably $99.05 a barrel. The dollar returned south today and that bolstered the gains. The dollar index that tracks greenback's performance slid to the low of 73.69 from the early highs of 74.03, and currently hovering bearishly around 73.75. Fears over the slowing global recovery and the lackluster U.S. economic performance is increasing the downside pressures on crude on weak demand prospects. The jitters are also extending ahead of the OPEC meeting where speculation is rising for the possibility for the cartel to increase their production quotas. Some see the possibility for delegates to try to stem the gap between their expectations for crude oil prices outlook. Where some nations ignore the outcome of rising prices like Venezuela and Iran and others like Saudi Arabia worry that the rally will curtail growth and accordingly lead to the drop in demand and oil prices, which eventually leads to two faces for the same coin. We expect the volatility to remain evident today and the mixed trading to control the market until the final confirmations from the OPEC tomorrow and the API with the EIA reports as well from the United States clearing the status of consumption and demand from the world's biggest oil consumer. More losses are likely to be seen for crude oil in the coming period as we said with steady trading below the marginal $100.70 a barrel.
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