Crude Heads For Its First Loss In Nine Weeks

Crude oil fell Thursday towards the $95.55 level after the ECB expressed concern over the recent rise in the euro, but China’s strong trade data and the rising tensions in the Middle East is helping crude to trim some of its first weekly losses in nine.

Crude is trading as of this writing around $96.00 a barrel level compared with the opening at $95.89 and with the highest at $96.17 and the lowest at $95.69. On the short term crude finds support at $95.40 then at $95.05 and resistance at $96.50 then at $97.00.

European Central Bank head Mario Draghi said Thursday that the economic weakness that induced by the debt crisis will continue to afflict the region. Moreover, he expressed concern over the recent rise in the euro which hurts export prospects of the 17 countries.

This helped push the euro sharply lower against the dollar, towards the 1.3370 levels from the 1.3570 levels, and determined the dollar index to rise above the 80.10 level; a stronger dollar weighs on oil prices by making crude more expensive.

But China’s strong trade data on Thursday helped improve the outlook for oil demand. China`s January exports and imports outpaced forecasts, adding to evidence that economic recovery in the gaining momentum in the world`s second-biggest oil consumer.

As China’s refineries increased production ahead of the Lunar New Year, the nations’ crude oil imports in January rose 7.4% from a year ago to 5.92 million barrels per day, which is the third highest daily rate on record.

“This is the strongest showing of China’s export growth since last April and bodes well for China’s demand growth for energy. We continue to forecast a sustained high oil price”, said Gordon Kwan from Mirae Asset Securities Ltd in Hong Kong.

Adding to the upside pressures on oil prices Friday was the rising tensions in the Middle East. Iran`s supreme leader rejected the U.S. offer to hold direct talks on the nuclear program later this month, triggering concerns over supply.

“It does not look like the tensions with Iran are going to dissipate anytime soon. They are going to be bubbling under the surface, which will keep a floor under the oil price”, said Ben le Brun from OptionsXpress in Sydney.

Adding to supply worries from the region is the instability in Tunisia where the assassination of an opposition leader this week fueled street demonstrations and violence. Tunisia is located between major oil producers Algeria and Libya.

Brent is trading as of this writing around the $117.80 after rising 0.48%; natural gas is trading at $3.275 per 1,000 cubic feet after falling 0.37%; gasoline is trading at $3.0111 a gallon after rising 0.37%; heating oil is trading at 3.2204 after rising 0.65%.

Markets are eyeing today Germany’s trade balance, Switzerland’s retail sales, Italy’s industrial production, Canada’s unemployment rate and employment change as well as the U.S.’s trade balance numbers for December.