|News||Crude declines amid deepening debt crisis in Europe|
|Analysis||Crude oil declined today amid fears over the European continent which struggles to contain the crisis, as fears increased after the Greek government announced yesterday that it will not meet the target deficit cuts this year and the next year, which raised doubts level over the sixth tranche and if the EU/IMF would release it or not.|
Investors started the week with concerns and doubts over Greece, and whether it will default or not, as the Greek announcement of not getting the deficit target has fueled fears across global markets and would the Troika release the sixth tranche of last year’s bailout, and the ability of Euro zone leaders to contain the crisis from spreading.
Jitters are evident in global markets, which affect crude prices negatively amid the deepening debt crisis in Europe and the fragile recovery around the world, factors that would affect the future demand for crude negatively.
Oil for November delivery is currently trading around $77.70 a barrel after recording a high of $78.75 and a low of $77.35 after it opened the session at $78.51, we saw a huge decline in oil prices on Friday as it opened the session at $83.08 and closed the session at $78.69.
The European finance ministers will meet today in Luxemburg amid fears over the Greek crisis, the main fear is what will happen for other debt laden counties if Greece default, which called contagion risks as Italy and Spain, are two big economies in the area, and any dark future for them is considered so risky for the whole economy in Euro zone, and would destroy the common currency (Euro).
Focus remain on the European countries, especially for today as the European finance ministers’ meeting could end with some results that investors are waiting for in order to know how leaders would act to contain the crisis amid all these disappointing data from Euro Area.
Last week, we saw crude fluctuated amid sovereign debt crisis in Europe which is deepening a day after day as well as the fragile global recovery, but the U.S. GDP has encouraged investors after it came better than expected in the second quarter, which affected crude positively and pushed it to the upside, but fears returned to dominate global markets over European crisis and the slowing growth in U.S, especially in their labor sector.
The soaring dollar has affected crude heavily and put more negative pressure on it, as the U.S. dollar rose at the beginning of this week amid fears and concerns that dominate markets, calling the Greenback as a safe haven.
The USDIX opened the week’s trading with a bullish gap at 78.97 and it recorded a low of 78.84 and reached so far a high of 79.14, where it is currently trading at 78.96.
Volatility may remain evident in today’s trading until we see what will happen in the EU finance ministers’ meeting and if the International Inspectors will approve to give Greece the sixth tranche of last year’s bailout.