Crude inclines trying to erase some of yesterday's losses
After crude oil dropped sharply yesterday, it is trying to correct this decline today amid glimpse of hope that appear from EU summit which is considering new rules to control the crisis, however, uncertainty remain high amid no deal signs on EU treaty changes which is opposed by UK. Europe is the main focus today as the awaited summit is taking place in Brussels, where it started yesterday late and showed yesterday that leaders came out with 200 billion euros support to the IMF which will open a direct channel with the EFSF in order to support debt-laden nations, which will be work along with the ESM that will work with 500 billion euros. Crude opened today's session at $97.96 and recorded a low of $97.53, where it rose to reach so far a high of $98.55 and it is currently trying to cover the losses it achieved yesterday as it currently trading positively around $98.22, and we cant neglect the main role for the US dollar in pushing crude to the downside, as it rose significantly yesterday to put more negative pressures on crude. Despite these positive signs, crude dropped sharply yesterday after the ECB's president Mario Draghi signaled that the bank may not help debt laden nations, as it's not the bank's mandate to buy debt laden nations' bonds, and when he signaled that the bank cut its growth forecasts where next year the economy might be contracting by -0.4% or growing by 1.0% or between. For the time being, uncertainty is high amid no deal on how EU will make the treaty changes in order to have a full insight on nations' budget and control the deficits to avoid any systematic risks and to be able to control any problem that would happen. On the other hand, the package of changes to the EU treaty was opposed by some nations, which in result led European leaders to come up with an intergovernmental treaty, which will include the 17 euro-area nations in addition to any EU nation that would like to join, where this treaty will become now the key solution to resolve the escalating debt crisis. In addition, European leaders also agreed to toughen budget rules. Pessimism spread in the market after the European Banking Authority destroyed any glimpse of hope that appeared these days as it raised the estimates for the needed capital by banks to 114.7 billion euros from 106 billion euros, as Europe attempts to raise the core Tier 1 capital ratio to 9% by mid 2012. In Asia, China and Japan played a major role of disappointing global markets, as Japan showed that its economy growth is slowing in the third quarter which give signs that the global economies is deteriorating amid slowing global growth, which will curb the oil demand from the whole world. Also, China reported a weakening industrial sector as its industrial production declined in November amid declining global demand and it will affect the whole economy as the Chinese economy is relying heavily on industrial and manufacturing sector. As we can see, many factors that affected crude oil negatively yesterday and drove it downwards beating all encouraging data or factors that would push crude to the upside, where volatility will keep oil movements unpredictable as the EU summit is under progress so far.