|News||Crude started the week with downside bias|
|Analysis||Crude oil hovers around the opening level after last week’s sharp rally which took crude a little below $105.00 level. The commodity faces different factors that kept it without a specific direction, where a downside correctional wave may take crude lower.
Crude oil opened today’s session at $104.92 and recorded a high of $105.02 and a low of $104.64, where it is currently trading around $104.77 a barrel.
Crude found a strong support last week despite the slowing recovery pace in the world’s biggest economy and oil consumer. But speculation that the FEDS may announce another round of quantitative easing has helped the commodity to achieve good gains despite the weakening economy.
Also, the commodity found a strong support from the declining dollar, as the currency declined sharply on the FED'S quantitative easing intentions. The declining dollar played a significant role in pushing crude to the upside reaching $105.00 level.
On the other hand, we saw many negative factors that affected crude last week, as the pessimism wave that swept Europe amid rising borrowing costs on Spain and Italy, raised the tension level over Spain which faces a very high unemployment level and a weak economy that urged the rating agency S&P to downgrade Spain’s credit rating.
The Spanish economy entered officially a double dip recession after the economy shrank for the second consecutive quarter, as the economy shrank by 0.3% in first quarter such as fourth quarter’s contraction at 0.3%.
We saw this high uncertainty in Europe last week and it will continue this week, as Spain entered the recession officially and S&P still see negative signs in the country and its financial sector, as the agency stepped today to downgrade 16 Spanish banks.
Volatility may appear today but the downside pressure may continue to push the commodity downwards as nothing can halt this downside wave amid uncertainty in Europe and fears over U.S. recovery pace. As we cannot see any positive factor today that would be able to push crude upwards.
Technical analysis for precious metals with major support and resistance levels and recommendations for 18-08-2009