|News||Crude fluctuates amid uncertainties|
|Analysis||Crude oil continues to fluctuate since the opening of today’s session despite the bad sentiment that appear among investors after the rising possibility of a Greek default due to their announcement that the country will not meet the target deficit for 2011 and 2012.|
Oil for November delivery is currently trading around $76.18 a barrel after recording a high of $77.26 and a low of $75.92 after it opened the session at $76.30.
Yesterday, Euro area’ finance ministers met in Luxemburg to discuss the latest development that in the region, especially the Greek situation which been the focus for many days, with rising possibility that it will default.
After the finance ministers meeting, they decide to delay the decision of giving the sixth tranche of last year’s bailout to Greece till after October, which is considered the second time they delay this decision because Greece didn’t keep its part of the deal by missing the target deficit.
Also, the Troika are assessing the situation in Greece to know whether the country is eligible for receiving the sixth tranche or not, although, the Greek government said that they might default if they do not receive the 8 billion euros tranche.
Greece is in a tragic situation at this period of time, as the country’s debt has exceeded the limit and because of that they announced many austerity measures in order to cut the budget deficit, knowing that they didn’t, these measures have affected growth and fueled the deep contraction.
Crude is a very growth sensitive commodity and all factors that appear from Euro zone are showing a slowing pace of growth and a dark future for the economy, which affects oil prices negatively along with the slowing global recovery.
Economists around the globe are expecting a double-dip recession for the global economy, as U.S. economy, which is considered the world’s biggest economy, is still weak amid rising unemployment and fragile growth in manufacturing and services, which as a result affects the global recovery that is losing the upside momentum.
On the other hand, we can see the opposite movement for oil against the U.S. dollar, which affects crude oil significantly and push it to the downside, as demand on the dollar increased as a safe haven amid uncertainties that dominate investors’ sentiment.
The USDIX opened today’s session at 79.64 and it recorded a low of 79.40 and reached so far a high of 79.81, where it is currently trading at 79.70.
Volatility may remain evident in today’s session awaiting any effective moves and decisions from EU leaders in order to contain the crisis and prevent it from spreading, as today EU leaders will meet to discuss the headlines in the Union after yesterday Euro area finance ministers met.