The markets rejoiced over the results of the Greek election at least initially. Of course shortly thereafter the markets are now asking now what. While the election results favoring the pro-Bailout parties seem to suggest that Greece will stay in the euro the greater issues that drove the markets to the brink of disaster really have not gone away. In fact some markets may be a bit disappointed as they were hoping for massive stimulus. Now that Greece has dodged the anti austerity bullet will global central bankers have the same will to stand up and support the global economy.
In India at least we know that they are. Instead of rising in interest rates to ward off inflation and slow commodity demand growth they decided to stand pat. The of course should be supportive to oil over all but is it going to be supportive enough to overcome the disappointment of the absence of printed money.
In the US signs that gasoline demand is rising is giving oil some outside support. Because of increased runs oil should fall by 2 million barrels this week. Gasoline supply should rise by 1.5 million barrels. Distillate inventories should also pop up about 1 million barrels.
The Other supportive factor is the possibility that geo-political risk could stop the market from collapsing totally. There is uncertainty in Egypt along the path of the Suez Canal as the military gains more control in the aftermath of an election that the Muslim brotherhood says they one as well as the ongoing showdown over Iran's nuclear madness. Bloomberg News says that the Iran's latest attempt of giving the appearance of compromise over the most contentious part of its nuclear program failed to convince the European Union to reconsider a pending embargo on oil shipments from the Persian Gulf country. They say that while diplomats have begun a two-day round of discussions in Moscow over Iran's atomic work that officials say probably won't yield enough progress to end the threat of military strikes. Chinese, French, German, Russian, British and U.S. negotiators convened today with their Iranian counterparts behind tight security at a hotel near Russia's Foreign Ministry.
These meetings may actually give oil a boost if it looks like they will fall apart. The Increased chance of war will rise if these talks fail.
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