| News | Crude oil reverses higher on hope policy makers can stave off crisis |
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| Analysis | Crude oil futures fluctuated heavily today with the focus still on the euro area and Greece. Upside support has been growing in the market on news that the Greek prime minister might resign, and although his office denied the reports the possibility for a solution in Greece around the referendum might be taking place. Crude oil futures for December settlement are trading higher by 0.77% at $93.22 a barrel after opening at $92.22 recording so far the high of $94.23 a barrel and the low of $90.87 a barrel. Investors are mixed over the outlook and so far the reaction is positive to the unexpected rate cut from the ECB in an attempt to cushion the economy from a hard landing in recession. The market is not reacting to Draghi’s warning that Europe is heading to a mild recession or the current crisis in Greece as they still focus on the progress there and hope that they can break the deadlock as the PM office said that the referendum can be avoided if the political parties reach an agreement. Crude was also still supported by the drop in weekly jobless claims below 400 to 397 thousand from 406 thousand the previous week, which was also better than expectations. The good data supported expectations for a good labor report tomorrow and offset the weaker than expected ISM Services which dropped to 52.9 from 53.0. We still see the market’s reaction mixed to incoming news and events with the volatility to remain as the Cannes summit starts. The eyes will still be on progress in Greece as the Prime Minister is still expected to give a press conference after ending the meeting with the cabinet as he tries to save his waning support especially as the finance minister opposes the referendum. The market is reacting to the rising chance that the referendum will not take place, especially as Papandreou loses the backing of his own party and that is what markets are thrilled about, as the referendum is seen likely not in favor of the bailout and according will end in Greek default and euro exit. |
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