Crude is trading higher today ahead of rate decisions and EU summit
Crude oil is trying to erase some of yesterday's losses as it declined after the EIA reported a rise in U.S. inventories last week opposed to expectations, where it is fluctuating heavily ahead of the EU summit, and an expected rate cut by the ECB. Crude oil opened today's session at $100.61 and recorded a low of $100.24 and it reached so far a high of $100.92 and is expected to continue this upside rally today, where it is currently trading positively around $100.87. Mixed factors that affect crude today and volatility is evident in trading ahead of major data that will be released today, as the ECB is expected to cut its rate by 25 basis points in order to support growth and help the weakening economy to improve. Also, the ECB may ease its lending policies to European banks, in order to avoid any credit crunch between banks amid high uncertainty and growing fears that dominate the continent due to the deepening debt crisis. the EIA report showed that the U.S. commercial crude oil inventories increased by 1.3 million barrels from the previous week. At 336.1 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year, where Distillate fuel inventories increased by 2.5 million barrels last week and are in the lower limit of the average range for this time of year. The EIA report has affected crude negatively yesterday as it signaled low demand from the world's biggest oil consumer amid signs of slowing growth, the global recovery is losing its positive momentum amid the deepening debt crisis and slowing growth around the globe. Although, global markets are eagerly awaiting for the EU summit which will be start tonight and the heavy demand will continue tomorrow, and markets need and expect decisive plans and decisions in order to solve the debt crisis, where hopes are seen in markets that leaders are capable of doing such a thing. On the other hand, fears on Iranian oil production and growing tensions in the Middle East are driving oil higher and keeping it above the $100 critical level, as the U.S. sanctions on Iran along with EU consideration to ban the Iranian crude imports will affect global oil supply indeed, where a shrinking oil supply would push oil higher despite any fears that spread in global markets. Volatility will remain high today ahead of ECB, BOE rate decisions, especially the ECB which is widely expected to ease its monetary policy by cutting its interest rates by 25 basis points to reach %1.0 level, and the bank may also reveal new long maturities loans for banks to further ease the strain on markets and support the faltering growth.