Fundamental Oil Report (2012-03-28)

News	EIA report
Previous	-1.2 million barrel
Forecast	2.5 million barrels
Analysis	Crude oil struggles today amid two different languages from Europe and the United States, as EU leaders signaled that Euro crisis is almost over where the FEDS chairman warned over his country’s recovery pace, which triggers volatility in the market. Crude oil opened today’s session at $106.75 to reach so far a low of $106.37 and a high of 106.92, where it is currently trading around $106.51 a barrel. Crude oil is biased bearishly proceeding in yesterday’s downside wave which took crude slightly lower after the American Petroleum Institute reported that U.S. oil supplies rose by 3.6 million barrels much more than expected. This indicated a weakening demand in the world’s biggest economy and oil consumer. Also, the API’s report may signals today’s EIA report which is expected to show rising inventories last week by 2.5 million barrels, but the API raised expectations that it may report more stockpiles than expected, which will ease the way for the commodity to the downside. On the negative image, we can add UK’s pessimistic data to it which pushed crude to the downside after the final reading for 4q GDP has been revised lower showing that the economy contracted by 0.3% compared to the previous -0.2%, raising the fear level in the kingdom and increasing the possibilities that the economy is heading into a recession. Now, we can ask ourselves this question, what is protecting crude from falling sharply at the current time? Well, we know that investors’ fears over global oil supplies never fade and they are keeping the possibility of a military action between Iran and the west in mind, and this is considered to be the first factor that is preventing crude from dropping. The second one, we can pinpoint here to recent improvement signs in the world’s biggest economy which been frustrated by FED’s Chairman which called the current recovery pace is far away from normal, however, these positive signs helped crude as well. Finally, efforts that been made by European leaders to halt the debt crisis and prevent it from spreading which ruled out the Euro collapsing possibility is also another factor that is helping crude. Especially after leaders showed their optimism yesterday signaling that their debt crisis is almost over.  In general, low trading will precede high volatility in today’s trading, as investors are eagerly waiting for EIA report which may show rising U.S. inventories by 2.5 million barrels last week, compared to the previous reading that show a drop in inventories by 1.2 million barrels. Before the EIA report, eyes will be headed to U.S. important data, which may show an improvement in durable goods orders, as investors are looking for any sign for the recovery in the States especially after Bernanke dimmed hopes and ambitions.