Crude Oil Demand Decreases As US Faces Possible Recession
From FX Empire
As the year draws to a conclusion crude oil prices are trading below $90.69. A lack of concrete decision on the US fiscal budget talk held on Sunday might have weighed down on oil prices. However, the threat of a collapse of Syria government due to prevailing civil war is limiting the fall. The UN envoy to Syria has warned that failure of government and rebels to pursue a political solution could lead to the full collapse of the Syrian state and threaten the World’s security.
Speculators can expect oil prices to gain on concern of possible supply disturbances in the Middle East region. On a positive note, China the world’s second largest oil consuming nation has reported a rise in manufacturing activity index which indicates higher fuel demand.
There are no economic data releases from the eurozone. From the US, manufacturing data releases from the Dallas region is likely to show improvement for the month of December. This may prove to be further supportive for oil prices ahead of another round of fiscal talk meet tonight. Let’s face it as the US fiscal deadline draws close little eco data will have a reaction on the markets. In a light volume day with many traders sidelined and many on vacation, the only focus today will be news and statements from Washington.
Crude oil futures closed slightly lower on Friday after a delays EIA report showing a smaller-than expected decline in the nation’s crude supplies last week, but the commodity still closed in positive on a w-o-w basis. Crude oil inventories fell by 0.6mn barrels.
Without a deal in the US some economists have predicted a collapse of the US economy turning back towards recession, others say that it might not be so bad, but it will have an effect on GDP in the US and a stronger effect on US consumer confidence which will weigh heavily on energy demands, which is a negative for crude oil.
With markets closing early today for the New Year’s holiday volume is expected to be light and speculators are not expecting a last minute deal from Washington, and if one is presented it will only be a stopgap measuring buying time.
The US dollar continues to climb as traders seek safety as financial and economic uncertainties weigh on the markets. This rise will also weigh on crude prices.
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