Crude oil is heading downside affected by a stronger dollar

Crude oil falls today amid stronger dollar which weighed the commodity sharply, beating all other positive factors that pushing crude as US crude stockpiles unexpectedly dropped last week as EIA reported, but to be honest, crude oil is trading now in high levels which will make it difficult to push it even higher.

Crude oil opened today’s session at $101.90 and declined sharply to reach so far a low of $101.03 from the high of $101.93, where it is currently trading around its lowest levels in the session.

Pessimistic data from the States yesterday have urged investors to buy dollar as a safe haven amid these bad circumstances, which considered to be negative factors on crude oil, especially after it started to lose upside momentum gradually when it reached a critical high levels.

The stronger dollar which seen in the past days, especially yesterday and today, has countered the positive effect from other factors such as the decline in US inventories last week as EIA reported yesterday that US crude stockpiles fell by 0.2 million barrels comparing to forecasts of rising stockpiles by 1.5 million barrels.

The USDIX which tracks the dollar against a basket of foreign currencies opened the session at 79.65 and reached so far a high of 80.07 and a low of 79.63.

Also, the uncertainty in Europe that derived from delaying the Greece’s second bailout have discouraged investors and halted the optimism that appeared in financial markets before, where finance ministers may delay the decision on the bailout after Greece domestic elections in April, but they may split the bailout into parts giving Greece the card to avoid a default.

Fears spread further in financial markets when Moody's stated that it may downgrade 17 financial institutions including HSBC, Goldman Sachs and Bank of America and it might also cut the rating of 114 European financial institutions, citing the effect of the debt crisis, which seems to be worsening more and more.

And by shifting to oil supplies which been the main factor behind high oil prices, tensions between Iran and the west increased sharply yesterday which pushed crude prices up to high levels, as reports showed that Iran might cut the oil exports to six European nations before the EU start its embargo on Iranian oil

All in all, the focus will be today on Greece and its future after unexpected matters happened and a fully delay for the bailout will be dramatic negative on the market as the country has commitments must be met as soon as March, and eyes will be headed to US fundamentals as well.

Ecpulse

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