|News||Crude oil drops for the third day in a row|
|Analysis||Crude oil dropped for the third day in a row affected by the increased fears over the sovereign debt crisis and the slowing global growth which will be affected negatively on the demand outlook. Also speculation grew that Italy will be the next country to fall with the political turmoil in the nation, further increased the fears over the demand on oil.|
Light sweet crude oil opened today at $95.19 a barrel recording the intraday high of $95.19 a barrel and the low of $93.85 a barrel and is currently trading around $93.93 a barrel.
The strengthening dollar also affected the crude negatively, as the Dollar Index that tracks greenback’s performance versus its six major counterparts, rallied to the upside as it opened at 75.99 recording the highest at 76.61 and the lowest at 75.88 and is currently trading around 76.56.
The euro area finance ministers yesterday in their meeting in Brussels failed to ease the concerns and tensions that the crisis has intensified reaching to Italy. The end of a long Brussels meeting was not as productive as their promise to provide cheaper loans to Greece with longer maturities and more flexible terms failed to ease the jitters as they did not dismiss the possibility of default, ending their meeting with a short statement which only promised to find a solution “shortly” which made the confidence levels to drop.
The U.S. and Chinese data added more disappointment to the markets early this week after last week’s disappointing jobs figures from the United States and the rising Chinese inflation which signals more monetary tightening which would weigh on growth, which was the main reason for crude losses in the first place.
EIA report will be released tomorrow and expectations are that the inventories dropped by 1.8 million barrels which is also adding to the fears and jitters in the markets.
Volatility and jitters are again will continue in the financial markets as the EU finance chiefs will meet today in the ordinary monthly meeting and again the debt crisis will dominate the scene and the ability to contain the crisis and prevent the spread into another financial market meltdown will be the main issue.