|News||Crude oil gains backed by hopes from Europe|
|Analysis||Crude oil fluctuates since the opening of today’s session but with positive momentum on hopes that European leaders would find solutions to contain the crisis, where it fell yesterday after EIA reported a rise in U.S. inventories by 1.3 million barrel.|
Today, mixed factors are affecting crude prices as it rises correcting yesterday losses. On the one hand, G-20 finance ministers are holding a meeting today and it will continue till tomorrow, where it will give investors a hint for plan that may leaders will announce in their 3-4 November meeting.
And on the other hand, the Slovakian parliament approved in its second vote for expanding the EFSF after they refused to pass these measures in their first meeting, which increased hopes that European leaders may be able to contain the crisis, as the expanding program was one of the most important efforts that Europeans decided to take in order to contain the crisis, and Slovakia was the last voter for these measures.
Oil for October delivery rose in today’s trading and it is currently trading around $85.40 a barrel after recording a high of $85.44 and a low of $83.77, where it opened the session at $84.45.
Unfortunately, Standard & Poor’s credit rating agency downgraded Spain’s credit rating by one notch referring to the high private sector debt and slowing growth in the country, and it kept the outlook for Spain negative, where this move came after Fitch downgraded Spain’s rating last week.
Although, hopes returned to markets at the end of the week due to G-20 meeting which is expected to discuss effective solutions to the deepening debt crisis and prevent contagion risks, which intensified hopes for the European continent and eased fears, pushing crude oil to the upside despite the deepening debt crisis.
In the United States, concerns over the weakening economy eased after optimistic data released in the past days showed that the U.S. economy is getting a little better than before, which eased fears over the outlook for the economy as it projected that it might be heading into another recession.
By collecting all these factors, you might prefer buying oil instead of selling it with hopes from Europe to contain its crisis and find a way to solve it, and a better U.S. recovery pace those encouraged investors to buy oil.
Crude oil may remain volatile at the end of the week but with a positive momentum that may push it further to the upside due the Slovakian approve that increased hopes in markets despite S&P’s move by downgrading Spain’s rating which will find support from the U.S. data if retail sales were strong and confidence improved.
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