NewsOil jumps as sentiment bolstered on European expansion PreviousForecastAnalysisCrude oil recovered today and turned higher as the sentiment turned positive with the opening of European markets on strong growth figures from euro nations led by Germany supporting equities and commodities and sending the dollar south.
Crude oil futures for June settlement moved to the upside and currently trading bullishly at the intraday high around $100.39 a barrel, recovering from the early low of $97.86 a barrel.
The sentiment was boosted today with the preliminary GDP readings for the first quarter from the euro area, which offset the focus from the debt crisis with strong figures. Germany was the biggest support with the reported 1.5% expansion rising from 0.4% in the fourth quarter of 2010 and beating 0.9% expected.
Germany’s growth was bolstered by domestic expansion and not just driven by trade further supporting the expectations that growth is expanding in the euro area and Germany will lead the recovery in the euro area. France also reported strong growth with 1.0% in the three months from a revised 0.3% in the fourth quarter from 0.4%, beating the expected 0.6%. Even Spain expanded by 0.3% quickening slightly from 0.2% previous and expected.
The figures come ahead of the euro area’s GDP that is expected at 0.6% and likely now will beat expectations with stronger expansion. Investors reacted positively on the data as European equities opened with upside gains and moved to the upside and lifted U.S. futures as well.
Growth is positive on commodities for sure on prospects for recovering demand from Europe, especially for crude oil as industrial activity strengthens. Further support was the dollar’s decline pressured by the positive sentiment which bolstered commodities gains.
The dollar index which tracks greenback’s performance versus its six major trading partners fell south to currently hover around its lowest set at 74.87 down from the high of 75.44. The euro also rallied on the data to the high of 1.4314 from the low of 1.4182 earlier this morning.
We can see the recovery ongoing in the market especially as the end of the week brings high volatility and could have pushed crude higher on position squaring and recovery after the heavy selloff seen this week. The volatility is not over for the day with more data set for release from the euro area growth to the U.S. inflation figures and consumer confidence.