Crude oil trading within a narrow range after strong losses
Crude oil is trading within a narrow range today after it slumped yesterday affected by the EIA report which showed an increase in U.S. crude inventories which indicates that the demand from the world's largest oil consumer is faltering in addition to the weak fundamentals. Light sweet crude oil for September opened today at $91.91 a barrel recording the intraday high at $92.53 a barrel and a low of $91.50 a barrel and is currently trading around $91.87 a barrel. A strengthening dollar is another reason pushing oil to the downside, as the USDIX opened today at 74.02 recording the highest at 74.61 and the lowest at 73.85 and is currently trading around 74.40. The EIA report showed that the U.S. commercial crude oil inventories increased by 1.0 million barrels from the previous week. At 355.0 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.7 million barrels last week and are at the upper limit of the average range. Fears persist in markets that the U.S. debt-ceiling increase and budget deficit cut may hammer growth, especially as the most recent data from global economies refer to a slowdown, pushing shares further to the downside. The ISM services confirmed the weakness in the services sector, as the ISM services index slowed down in July to 52.7 below expectations of 53.5, which spread pessimism among traders, while factory orders fell in June by 0.8% in line with median estimates. Yesterday, the ADP report showed that the private sector added 114,000 jobs in July, lower than 157,000 jobs added in June yet better than forecasts of 100,000. However, the main highlight will be on the awaited non-farm payrolls report due on Friday. Today the Bank of England and the European Central Bank announce their rate decisions where the main focus will be on Trichet and his press conference at 12:30 GMT, so volatility and fluctuations will surely be seen with the high tension in the market and fears over the outlook for the recovery which will keep choppy and mixed trading obvious today.