January Crude settled 58 cents, or 0.7%, lower at $87.79 a barrel on the New York Mercantile Exchange on Friday.
China raised banks' reserve requirement ratio for the third time in a month Friday. China's statistics agency is due to publish data Saturday that economists expect will show rising consumer price inflation in the world's second-largest oil-consuming nation.
China's move to raise its banks' reserve requirement is seen as a less drastic form of monetary tightening than an interest-rate increase. But such an increase could come this weekend from the People's Bank of China following the inflation data release. A raise in rates should result in lower pricing in coming weeks.
Morgan Stanley commodities analysts on Friday predicted crude prices would average $100 a barrel in 2011 and $105 a barrel in 2012. Oil prices reached a two-year high last week as Wall Street analysts predicted $100 barrels for 2011. Future contracts settled at $87.79 on Friday. Oil ministers from Saudi Arabia to Venezuela dismissed concerns that OPEC needed to raise production rates to keep barrel prices low, which could help to lift demand further and accelerate global economic growth.
Look for resistance this week around the $90.00 a barrel area for Crude Oil. Any push through $90.00 could see a test of the 52 week high $93.31 area. On the downside strong support should come in at the $86.00 level. Below that a test of $83.00 is possible.
Light, sweet crude for January delivery settled $1.19 higher at $89.19 a barrel on the New York Mercantile Exchange Friday.
Crude prices reached a two-year high as a falling dollar and concerns that global oil supplies may be tightening trumped a weak report on U.S. employment.
The Euro has risen against the dollar this week after worries subsided about the financial health of some European countries. The dollar weakness has some analysts calling for a sustained push above $90. Oil prices defied worries about the U.S. economy after data Friday showed a smaller-than-anticipated rise in employment in November.
The reports suggested there remains underlying weakness in the economy, but oil rebounded quickly following the data. The dollar fell on the report, which typically helps oil prices by making crude cheaper for buyers in other currencies.
Despite Friday's report, economic data in the U.S. have been improving, and demand in China, the world's second-largest crude consumer, isn't expected to fall despite the government's efforts to slow the economy.
January Crude Oil settled $1.97 higher at $85.73 a barrel Monday on the New York Mercantile Exchange. Crude prices defied a drop in stocks and a stronger dollar, as a move higher in gasoline futures helped oil push toward $86 a barrel.
Oil prices has fallen to $80 a barrel over the last couple weeks due to worries about European debt and Chinas record high inflation.
Oil prices rallied on Europe’s rescue package for Ireland and the European Unions plan for future bailouts. The package, designed to ease fears about Europe's willingness to step in with aid, initially provided a boost for stock markets and the euro. But fears that other countries in Europe will also need aid sent investors looking for safe havens such as the Dollar and commodities.
Traders are looking ahead to this week’s economic data due to be released. . The Institute for Supply Management is due to release its monthly manufacturing report Wednesday. November nonfarm payrolls are expected on Friday. The Department of Energy is expected to report a modest 600,000 barrel draw in Crude stockpiles on Wednesday, according to analysts.
The strengthening Dollar typically results in lower Crude Oil pricing because foreign investors find the Dollar based commodities less attractive. However Mondays Crude Oil rally despite the strong Dollar may be a sign that Crude is heading higher despite European economic worries and a strong Dollar.
Look for resistance at Mondays high of $85.90 and then $86.50. On the downside look for market support close to $84.65 and then $83.00.
