Crude oil is trading within a narrow range since the opening of today’s session with a positive momentum after it rose yesterday on the back of European Central Bank decision to provide the European central banks with more dollar liquidity, which in turn pushed the commodities higher releasing some of concerns over future demand on oil.
Crude opened today’s session at $89.10 and it reached so far the low of $88.86 and rose to reach the highest at $89.75, as it is currently trading around $89.38. on the other hand, the USDIX which measures the dollar’s performance against six of majors currencies, rose today to prevent oil from inclining more, as it opened the session at 76.29 to reach a low of 76.22 and the high of 76.69, where it currently trading around 76.65.
The ECB along with Fed Reserve, BoJ, BoE and SNB said it will provide the European banks with three separate dollar loans to help in easing funding pressure on banks till the end of the year and to prevent the lending freeze between banks by increasing the dollar liquidity in markets.
This step by the European Central Bank has eased some concerns over the possibility of a Greek default, and other concerns over the European ability to get over the crisis, as the crisis in Europe are worsening and the downbeat data are much more than the upbeat.
On the other side, the German chancellor Angela Merkel and the French President Nicolas Sarkozy have made a joint statement after they met over the phone with the Greek Prime Minister George Papandreou discussing the status of Greece, as they said that Euro Area will not let Greece default on its debt, and Greece will not get out of the Euro Zone.
Investors are eagerly awaiting for the European finance ministers meeting today and tomorrow in Poland, as they will be looking for any comments, as it is expected to discuss the recent developments in the region and heightened financial markets tension, yet will they take any measure to ease the jitters.
Fears and concerns have intensified over the European future and the risk of contagion to other debt laden nations such as Italy and Spain, and the possibility of a Greek default which risen in the last period, but the European top officials comments and the statement that made by the European commission president which showed that they are willing to make a Euro-Zone bonds, in addition to ECB’s unexpectedly decision yesterday have eased some of the fears and pushed crude oil higher, as these factors has also eased concerns over the future demand on crude oil.
Volatility may remain evident in today’s trading as it is the last day of the weak, and investors will be awaiting for the finance minister meeting looking for any comments that may affect their trading, however, we may see oil incline at the short term due to optimistic data that seen in markets by the European officials to calm the markets down and relief the markets, but, the general trend for oil is to the downside amid the deepening debt crisis in Europe, as many investors sees that Greece will default but the question is; when that will happen?