Fundamental Oil Report (2012-03-15)

News volatility dominates crude movements
Analysis Crude oil declined sharply yesterday amid stronger dollar that pushed the commodity downwards and rising US oil inventories that signaled low demand in the world's biggest oil consumer economy, where it is struggling today to beat these negative factors and try to achieve some gains. Crude oil opened today's session at $105.50 recording a high of $105.92 and a low of $105.32, where it is currently trading around its opening level. Oil couldn't find a way to rise yesterday as the dollar continued in its upside journey raising the pressure on the commodity after the FEDS crashed any hopes of more monetary easing in the States, which pushed the dollar strongly but hit the oil forcing the commodity to decline. Also, rising US oil inventories have managed to pull oil prices down signaling for less demand in the world's biggest consumer, as the EIA reported yesterday that US crude stockpiles rose by 1.8 million barrels last week more than expected at 1.6 million barrels, comparing top the previous reading which showed rising inventories by 0.8 million barrels. Today, there seems to be shaky sentiment among financial markets weather from Europe or Asia, starting with Asia, worries and concerns increased over the world's second largest economy and oil consumer and about its growth pace, after Chinese Premier Wen Jiabao said his country is targeting slower yet more sustainable growth, which formed a bearish momentum that would take crude downside. Looking at Europe, we can see mixed factors that affected the sentiment, starting with the negative ones which led by Fitch rating agency that changed U.K.'s outlook to "negative" from "stable," stating that there is a one to two chance Britain would lose its top AAA rating within couple of years on the threats posed from anemic economic recovery, high sovereign debt, and risks from the European debt crisis. On the other positive hand, we can point to the approval of the IMF to extend duration for a 28 billion-euro loan provided to Greece on Friday to four years instead of three, this approval came after Euro zone finance ministers agreed to give Greece the second bailout after the country succeeded in the debt swap deal with the private sector. International Energy Forum The Saudi Arabia's oil minister reassured in the forum that his country is ready to cover any shortage of oil from Iran, which helped in easing pressures on oil supplies, on the other hand, the International Energy Agency (IEA) said that Iran's oil exports will probably decline by 50% when the sanctions take full effect in July. Is that true?, this is the question that investors are asking themselves, and could the world dispense the Iranian oil?, where reports showed that the US thinks India is not obeying US sanctions on Iran, forcing the White House to impose sanctions on one of its most important allies in Asia. By collecting all these data, we can see how balanced are they keeping crude oil around its opening level struggling to hold its grounds, which may trigger volatility today waiting for major factor that would define the next trend for the commodity.

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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