| News | Crude retreating at the beginning of the week |
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| Analysis | Crude oil declined since the opening of this week retreating from gains achieved last week due to the rising dollar which made commodities more expensive for investors after the BoJ intervened in the markets to stem the continuous rise in the Japanese Yen. Crude is trading with negative momentum since morning driven by the rising dollar and the darkness that covers the European debt plan as more details must be clarified in order to ensure help from China and other countries that would support Europe by buying the EFSF bonds. Crude oil opened today’s session negatively to open the week at $93.25 and recorded a high of $93.53 and recorded so far a low of $92.32, where it is currently hovering around $92.51. The Bank of Japan intervened in the market today for the third consecutive time this year in order to stem the persistent gains seen on the Japanese yen against the U.S. dollar, where the pair reached new all-time record, which hurt the economic recovery and growth especially after Japan is struggling amid disaster’s effects that hit the nation earlier this year. This intervention had affected global markets, where we can see that the bank sold huge amounts of yen and bought dollars instead, which supported the dollar to incline sharply bringing more downside pressures on commodities, and oil in particular, to trade lower at the beginning of a new week. On the other hand, vagueness is dominating the outlook for the implementation of the plan and more details are needed, where the G-20 meeting which will be held on 3-4 of November, may come up with more details for the role of emerging countries, BRICS, in supporting Europe. Also, the European plan for banks’ recapitalization is not enough in the eye of some investors to provide enough liquidity in markets, but the headlines would be declared after the G-20 meeting, which drives the uncertainty further. Nonetheless, global markets have seen a wave of optimism last week after EU leaders released the plan to see crude rising from around 87.00 to 95.00 levels, as the plan had improved the outlook for the economy, which will lead eventually for high demand on crude. Today, investors will eagerly awaiting key fundamentals from Euro Zone, as the unemployment is expected to remain steady in September, and the inflation rate is expected to ease as the CPI flash estimate would show. Amid lack of fundamentals from U.S. and some key fundamentals from Europe, the focus will be on Europe as usual, looking for any comments, hints or more details on the implementation of the European plan. |
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