Crude oil is on the gains streak today!

Crude oil climbed today benefiting from a weakening dollar and intensifying worries over global oil supplies as Iran remains stubborn over its nuclear program and stipulated the west to withdraw “illogical” demands that Iran should halt uranium enrichment. 

 

After the failure of the second round of talks between Iran and the west shifting negotiations to the next month, Tehran said that the West should withdraw their “illogical” demands that Iran halts production of uranium enriched to 20 percent saying that Iran has the right to produce nuclear fuel for peaceful purposes. The verbal war again raised tensions over the country’s oil supplies and outlook for more sanctions as talks seemingly are not taking action.

Crude oil opened today’s session at $91.13 and reached so far a high of $91.84 and a low of $90.84, where it is currently trading around $91.66 a barrel. 

 

The market is trading to the upside today despite worries in Spain over its financial sector as banks in the country are struggling and may call for international aid despite PM Rajoy’s assurances that Spanish banks will not seek foreign bailout.

In fact, China took over the market today on resurfacing signs that the country may take more steps to stimulate the economy in the coming period, which pushed crude as demand would improve from the world’s second biggest oil consumer.

 

In the past period, investors were little worried over the Chinese economy as Europe’s crisis affects Chinese growth by hitting exports, which forced policy makers to implement new measures to help the economy and domestic spending and stability for a sustainable growth path. The expectations for support are surely helpful in easing pressures on the market since China is one of the leading economies in the globe and a major driving force for global recovery. 

 

Back to Europe, fears remain afloat and the current relief rally may disappear soon due to the lack of optimistic fundamentals that could help the market maintain its upside recovery. Investors will track all developments from the struggling continent looking forward to hear the good news and leaders take the lead to announce more serious steps in order to fight the crisis.

More upside momentum for the commodity comes from the weakening dollar which dropped today against other currencies, as it opened the session at 82.22 to reach so far the lowest at 82.03. 

Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae