| News | Crude oil below $98.50 on possible downgrades in Europe |
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| Analysis | Although Italy's bond auction was string today, selling its maximum target of 4.75 billion euros which drove the borrowing costs, markets turned very negative after Standard & Poor's said it is possible it could downgrade some euro-zone countries as early as Friday, pushing crude towards the $98.20 level. This renewed the worried over Europe's conditions and the outlook for global recovery, pushing investors towards safe haven, abandoning the high yielding assets, where the euro fell today trading as of this writing around the 1.2657 level, while the dollar index is trading at 81.60. More downside pressures were imposed on crude following Europe's decision to delay the restrictions on oil imports from Iran for about 6 months, which eased the worries over a possible shutdown to Strait of Hormuz by Tehran which was keeping oil prices to the upside lately, as oil supplies could've been disturbed. Markets were able in the afternoon hours to shift their attention from Iran and Nigeria, and started worrying about Europe again. And combined with the gains seen by the dollar, crude oil managed to fall sharply today to the lowest at $97.87 from the highest of $100.17. Economic data today was mixed, as Europe's trade balance improved in Nov., yet in the US the trade balance saw wider deficit in Nov., yet the US consumer confidence rose in Jan. to 74.0 from 71.5 expected, as the improvement seen lately in the jobs sector sustained confidence. |
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