Fundamental Oil Report (2011-11-29)

News Volatility is dominating crude trading ahead of Finance ministers' meeting
Analysis Crude oil declined today as reversal moves started yesterday when oil breached $100 level, as it retreated after to the downside due to prevailing uncertainty and heav market movements, where global stocks declined as well ahead of major news that would take place today in Europe. Crude oil opened today's session at $97.76 and reached a low of $97.21, where it recorded so far a high of $98.24, and it is currently fluctuating around $97.86. Crude is so volatile today ahead of Euro area finance ministers' meeting which would put headlines to the EFSF and make an agreement on how the facility would ease market pressures by buying debt laden countries' bonds, as borrowing costs are still at record levels. Bond auctions that would be held in Europe today are adding more volatility in markets, as Italy is to sell as much as 8 billion Euros of three different maturities bonds, Malta and Belgium will sell bonds as well, where fears had already drove yields to high levels and countries today will sell bonds despite the surging costs that reached very sensitive levels amid fears that cover the European sky. On the other hand, George Osborne will admit today the British economy is weak as he will make his autumn statement today, and he will talk about the royal economy and challenges that face it, but he may also announce a stimulus plan for small and medium businesses in order to ease the pressure on those companies which will support the pace of growth in the country and especially support employment. Volatility is the direction for today's trading, as it will dominate global markets ahead of finance ministers meeting which may ease fears that dominate the continent, but it may intensify it if no convenient solutions for the crisis appear, ministers may approve as well on Greece sixth tranche worth 8 billion Euros, despite the lack of any written commitment from some parties in Greece. On the other hand, rating agencies are preparing for more downgrade moves that may be seen in the coming period amid deepening debt crisis and weakening banking sector, as S&P warned today that it may lower the rating for 87 European banks, and rumors said that the agency may change its outlook on the French credit rating in the coming days. In Asia, Japan has reported a higher unemployment in October at 4.5%, which put more pressure on the country to consider more stimulus to support the economy as many negative factors such as European crisis are affecting it and most importantly the surging yen. Yesterday, crude rose to high levels backed by different factors that pushed it to the upside, as hopes were seen in Europe that leaders may make more efforts in order to contain the crisis, as rumors of possible IMF aid for Italy appeared, but both parties had denied it, also, a weaker dollar was one of the majors factors that supported crude. Crude had supported as well by a good start for the holiday season shopping in the world's biggest consumer which started with strong Black Friday sales which supported hopes for the U.S. economic outlook and consumption status. Good demand expectations were also supported by supply woes as the situation in the Middle East continues to be edgy. Volatility will be the status for crude today ahead of the Euro finance ministers' meeting which put the headlines for EFSF as we said, but hopes that leaders would do something may take crude higher.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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