|News||oil rises at the beginning of the week's trading|
|Analysis||Crude oil continued its rally for the fifth consecutive day, at the beginning of the week’s trading despite the deepening debt crisis and backed by the improvement in U.S. labor sector as the Nonfarm payroll report showed 103,000 added jobs in the last month, also, the European efforts to contain the crisis eased some of the fears that dominant in markets.|
Oil for October delivery is currently trading around $83.61 a barrel after recording a high of $84.07 and a low of $82.83, where it opened the session at $82.85.
In Europe, the French president and the German chancellor have decided to contain the crisis and help the Euro area to survive, as they said that details on a rescue plan for the zone will be released next month, which encouraged investors around the globe to buy commodities.
On the other hand, the Belgian-French bank will be nationalized in its Belgian division, which considered the first step of the plan of recapitalization of the European banking system and strengthen it, the thing that eased concerns over the crisis, as leaders’ efforts are strong enough to contain the crisis.
The European factors have pushed crude prices to the upside as speculation that the growth would improve amid ECB’s decisions to inject more liquidity in the Banking system to avoid credit crunch crisis and Merkel-Sarkozy plan to contain the crisis and find the best solutions for the region.
In U.S., the jitters that were dominant in markets that the economy is in its way to face another recession have eased after the Nonfarm payrolls report that showed an unexpected improvement in the labor sector by adding 103,000 jobs during last month, which made investors less worried over the global recovery and the debt crisis in Europe especially after Fitch move that downgraded the Italian and Spain’s debt rating, confirming their colleagues decisions Moody’s and S&P that make the same move for Italy, but, the U.S. data has kept investors more optimistic for global economy.
Hopes from Europe and data from U.S. have gathered to make a positive pressure on crude oil despite the weakening global economy and slowing growth, however, if the European leaders failed to ease fears and jitters over the crisis, we will see a huge drop in global markets.
Also, the weakening U.S. dollar is putting much more positive pressures on crude oil, as it declined significantly since the opening of the week’s trading at 78.71 to reach a high of 78.77 and recorded so far the low of 77.98,where it is currently trading at 78.04.
Volatility may remain evident in today’s trading amid poor fundamentals from both U.S. and the European continent, and the focus will remain on Europe as any statements from leaders will have a big effect on markets.
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