Crude oil declined at the beginning of the week’s trading amid European debt concerns, and fears over the ability of Euro area to contain the crisis from spreading to other debt-laden countries such as Italy Spain, which considered big economies in the area.
Euro Zone leaders are struggling to contain the crisis, as they concerned much more not from the default of Greece but the effects on other countries, where the consequences would be huge on debt laden countries and they may fall like a domino.
On the other hand, most of the world leaders had urged Europe to do more in order to contain the crisis, and accordingly they are considering to expand the Euro rescue fund to keep the Euro countries afloat.
Oil for November delivery is currently trading around $78.80 a barrel after recording a high of $80.82 and a low of $77.12 since the opening price at $79.70
The dollar has a major negative effect on crude prices, where it rose today at the beginning of the week, which put more negative pressure on crude, as it opened the session at 78.12 and reached the low of 78.06 and then it rose to record the highest of 78.85.
The spot light now is on Europe, Greece and what are the contagion risks, shifting from the United States after they disappointed the investors after a 400 billion dollars plan to support the U.S economy, and mentioning that there is “significant downside risks” on the outlook, which caused a panic sell-off around the world.
The sentiment remain weak around the globe, with a general slowdown in the global economy along with a fragile recovery pace, as data from major economies has showed last week a contraction in the Chinese manufacturing followed by Euro zone manufacturing and services.
All in all, the data that released from majors economies along with a worsening debt crisis in Europe, are considered negative factors that affect crude oil negatively and put more downside pressure on it, as the world demand on crude is growing less than expected due to factors we said, also, the demand on crude is expected to slow in the future, amid slowing economies around the world.
Fears are dominant in markets over the global economy, as many economists are seeing the world economy is heading into another recession amid the worsening debt crisis in Europe, and a slowdown in the U.S growth, which means the key economies are not doing well.
The negative pressure may remain pushing crude oil to the downside unless we see optimistic data that relief investors, but with the lack of fundamentals we may see a choppy trading and uncertainty will remain evident in markets.