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23/08/2012 07:35:53 AM
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Publish Date23/08/2012 07:35:53 AM
Last Update23/08/2012 07:58:48 AM
Crude oil extended the gains today in a three-day upside journey with more signs of quantitative easing from the FEDS which pushed up the commodity by pressuring the U.S. dollar negatively. Also, the higher than expected drop in U.S. oil stockpiles helped push oil prices higher.
Crude oil opened today’s session at $97.39 and reached a high of $98.27 and a low of $97.16, where it is currently trading around $98.11 a barrel. The USDIX opened today’s session at 81.52 to extend yesterday’s losses by reaching so far a low of 81.29.
The commodity has been supported yesterday and maintains this upside momentum in today’s trading as the U.S. dollar remains weak which opened the door for the commodity to reach as high as $98.25 a barrel.
In fact, the FOMC minutes showed that members attested once again that the economy is picking up "very gradually" and this time precisely they insisted strongly that new QE is obligatory to boost the slow speed ratio of the current revival of the economy, since the recovery tempo is gradual and slow for too long as a result of local and global unending downside pressures.
These signs were enough for investors who waited for these positive signs for a while as they see more easing from the FED is necessary and policy makers in the world’s largest economy should move to help the labor sector and the struggling economy that faces strong downside risks from Europe.
On the other hand, the EIA report showed that the U.S. crude oil inventories declined by 5.4 million barrels from the previous week much more than the expected figure at 2.5 million barrels drop. Total motor gasoline inventories decreased by 1.0 million barrels last week and are in the lower half of the average range.
The decrease in U.S. oil inventories helped the commodity sustain its upside journey surpassing all upside barriers approaching the psychological $100 barrier, especially amid more easing signs for the world’s largest oil consumer which will help the economy and increase oil demand.
Those factors were strong enough to keep crude’s strong upside momentum despite negative signs from the world’s second largest economy and oil consumer. China’s HSBC Flash Manufacturing PMI contracted deeper than the previous month at 47.8 in August compared with the previous 49.3. The continuation of negative signs from China is heating up the easing probability which is being speculated frequently by investors.
In general, it’s all about the dollar movements and the FED’s monetary stance , this is the main factor behind oil’s upside momentum, adding to this the decline of U.S. oil inventories which as we said helped the commodity in this journey.
Although, the coming is harder for crude oil and its traders as it would be volatile amid the FED’s actual stance in its next meeting, and how things are going to be in Europe. Also, we will not forget fears and jitters over global supplies and over Iran in particular.
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