| News | Crude above $102.00 on Nigeria, Iran tensions while Draghi fuel optimism |
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| Analysis | As Draghi sees "tentative signs of stabilization of economic activity" and the string demand on the Spanish and Italian bond auctions today, overshadows the downbeat results seen from the economic data, fueling demand on the higher yielding assets including crude oil which trades around $102.20. Draghi said after the ECB decided to leave the rate steady at 1.00% after a unanimous vote, to assess the impact of its stimulus measures, that growth is expected to recover gradually and that the ECB is now very close to signing agency accord with EFSF. Meanwhile Spain and Italy saw strong demand on their bonds today, lowering the borrowing costs in both countries. This helped keep the euro steadily to the upside, trading as of this writing around the 1.2820 level, while the dollar index was trading with strong bearish momentum around 80.77. The dollar's sharp decline gave an upside momentum to commodities today despite the downbeat economic data from both Europe and the US, where gold is trading as of this writing around $1658.90 from the opening at $1640.85, while Brent was up 2.26% trading around $114.78. In Europe today the annual industrial production fell more than expected in Nov. by 0.3%, in UK the industrial production also fell in Nov. by 0.6%, while the US the retail sales unexpectedly slowed in Dec. to 0.1% from 0.2% previous, while the jobless claims rose to 399 K from 375 K expected. More upside pressures on oil prices today were imposed by the rise in crude inventories in the US yesterday by 5.0 MB from the expected 1.0MB, while Japan said today it might reduce its petroleum imports from Iran, which continues to threaten shutting Strait of Hormuz in response to the US and EU sanctions. The tensions between Iran and the West increased since a nuclear scientist was killed in a bomb attack in Tehran yesterday, increasing worries that Iran will actually shut down Strait of Hormuz which will disturb global oil supplies and affect prices. In Nigeria the protests that started after the government removed the fuel subsidy continue, starting to threaten oil exports coming from Africa's biggest oil producer. Thereby crude oil managed to rise today to the highest of $102.95 from the lowest of $100.88, while it opened at $101.03. |
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