Crude oil once again dropped below $80 and sank nearly -3.12% at 4460 as pessimism dominated market sentiment ahead of a highly anticipated EU summit due to begin later in the day. Dampening oil sentiment, hopes that European leaders would make headway on dealing with the crisis dimmed after a German government official indicated that the summit would not result in any detailed decisions and warned against high expectations among investors ahead of the conclusion of the summit. German Chancellor reiterated her opposition to the idea of joint euro zone bonds, while EU Economic commissioner said that the summit would focus on short-term measures to stabilize markets and ease pressure on at-risk countries. Pressure seen after the news that Saudi Arabia has reopened an old oil pipeline built by Iraq to bypass Gulf shipping lanes, giving Riyadh scope to export more of its crude from Red Sea terminals should Iran try to block the Strait of Hormuz, industry sources say. Meanwhile US oil consumption in April was weaker than expected, the US government said, but after months of declines there are signs oil demand may finally be leveling off. Also Norwegian oil production has fallen further due to a strike, with cuts now amounting to 290kbpd versus 240kbpd earlier this week. Now technically market is in oversold and getting support at 4399 and below could see a test of 4339 level, and resistance is now likely to be seen at 4569, a move above could see prices testing 4679.

Trading Ideas:

Crude trading range for the day is 4339-4679.

Crude oil declined slipping below $80 as pessimism dominated market sentiment ahead of EU summit.

US oil consumption in April was weaker than expected, but after months of declines there is signs oil demand.

Saudi has reopened pipeline built by Iraq to bypass Gulf shipping lanes, giving Riyadh scope to export.