Crude oil started the session with choppy trading after the volatile start on Monday with the absence of U.S. markets on Labor Day holiday, where the sentiment started to change and drastic market movements were seen after the unexpected SNB move.
Crude oil futures for October settlement are trading higher this morning at $84.47 recording the high of $84.97 and the low of $83.19 a barrel reversing some of Monday’s losses; there was no settlement on Monday with the market holiday in the United States and today the volatile trading will extend into the New York session.
The market fluctuated on hopes of a move by the Fed or as near as Thursday by Bernanke, where investors eye his jobs speech after last Friday’s payrolls figures unexpectedly stagnated in August, adding another pin in the recovery coffin.
Signs of recovery are not seen and eyes are on the stimulus to aid the faltering economy. The SNB was the first to make a surprise move today in a central banks week which supported stocks and currencies unwinding from haven franc demand which also fueled some support for crude. The SNB said it will not tolerate excessive franc appreciation and set the minimum exchange rate for the EUR/CHF at 1.20.
In other support for crude oil was the closure of a major oil field in China which lifted prices to the upside for now. The field owned and operated by CNOOC and ConocoPhillips was ordered to cease operations after they failed to seal a leak for more than two months.
The gains are merely a rebound from the rout seen yesterday spreading across the board in Asia and Europe and choppy trading will prevail today with the return of U.S. markets and the fragile sentiment that is still prevailing with the slowing recovery and worsening debt crisis sill predominant downside pressure on oil.