11/06/2012
Crude oil opened the week’s trading with a bullish gap after the weekend’s upbeat news from Europe. The euro finance ministers agreed to lend Spanish banks around 100 billion Euros which eased concerns over the country’s banking sector.
Recently, Spain and its ailing banking sector attracted investor’s attention amid fears the sector will force the Spain off the edge amid deteriorating fiscal conditions. The ministers said they are ready to offer Spain the lifeline that will reach up to 100 billion euros which eased the tension and pushed the entire market to the upside. Spanish banks will be able now to meet the estimated capital requirements with an additional safety margin.
Crude oil opened today’s session at $85.59 and reached a high of $86.61 and a low of $85.23, where it is currently trading around $85.31. The USDIX opened the session today at 81.87 and rallied to the upside to reach so far a high of 82.07 in an attempt to cover the opening gap from Friday’s closing of 83.53.
Crude oil opened with an upside gap after closing Friday’s session at $84.27 to open today’s trading session at $85.59 and continued the bullish bias, but the commodity will need more confirmations over the Euro’s outlook which will be presented by Greece’s elections by the end of this week.
More upside pressure came from Iran , as fears of oil disruption from the country resurfaced after the U.N. nuclear watchdog (IAEA) said no progress had been made in the meeting aimed at sealing a deal on resuming the agency’s long-stalled investigation; it described the outcome as "disappointing.” Iran blocked the agency’s inspectors from entering suspected sites, which signaled a potential failure in higher-level negotiations between Tehran and world powers next week.
By collecting all these data, we can see how crucial next week is for the Euro’s future with the Greek elections over the weekend that will decide whether the country stays in the euro or not.
For crude, volatility will dominate the movements this week with expected trading range among $80 and $85, as investors will take into consideration what will happen next week in Europe, and OPEC 14 meeting will be spotted by oil traders especially if they changed their output target.
