Crude oil continued to trade with downside tendencies for the fourth day and steady below $110 a barrel extending yesterday's drop.
Crude oil futures fluctuated this morning and declined in Asia to the low of $108.42 a barrel and now recovered to trade slightly higher around $109.17 near the intraday highs. Crude is fluctuation heavily after the last three days of losses, where crude settled yesterday with 1.6% loss at $109.24 a barrel.
The market is reconsidering their bullishness on crude that was strongly dependent on geopolitical pressures and fears over the drop of supply. Nevertheless, with the adequate supply and confirmations to this notion from the IEA and OPEC and also Saudi expanding supply, the focus shifted to the demand side which is looking disappointing for now.
Sings of slowing recovery, and especially in the world's biggest consumers is now aching the market and pressuring oil south. The US data were lackluster yesterday with weaker than expected private payroll figures and slowing services expansion increased the downbeat vibe over the course of the recovery.
China and Japan account for the biggest consumers next to the US, and both also have a negative outlook for demand. China continues the monetary tightening which might slow growth and consumption, and Japan is living the devastating aftermath of the March 11 earthquake and also cut its demand prospects.
This downside pressure and profit taking was extend with the EIA reporting a rise in crude inventories which assured slowing pace of recovery is accompanied by weak consumption figures. Crude stockpiles rose 3.42 million barrels to 366.5 million last week, the highest since October. As for gasoline, the focus for now, despite the drop in stockpiles by 1.05 million barrels, consumption declined 2.2% to 8.94 million barrels a day according to the EIA which offset the effect of drawback in supplies.
Overall, the market is still awaiting more figures for the week, with the European rate decision today, moving to the weekly jobless claims from the US ahead of the nonfarm payrolls tomorrow which will be the most effective of the market till tomorrow.