|News||Crude declines amid high uncertainty in Europe|
|Analysis||Crude oil declined today extending yesterday's losses after a conflict appeared between EU leaders on how they will support the EFSF and the roadmap for Europe, which made investors worried over the continent ahead of the crisis summit that would discuss solutions for containing the crisis.|
The conflict between French and German policy makers has damped hopes over the ability of EU leaders to contain the crisis, as rumors appeared yesterday early that France and Germany reached an agreement over the debt crisis, but all of them were wrong after the French finance minister showed the disagreement with Germany on the role of the EFSF and ECB.
Concerns and doubts were renewed after this disagreement between EU leaders that will not solve the crisis but take it deeper and deeper, as hopes were before this conflict that EU leaders would be able to come up with a comprehensive plan to solve the debt crisis and prevent it from spreading on their October 23 summit.
Crude oil futures for December delivery opened the session at $86.20 a barrel and recorded the highest at $86.54 and the lowest at $85.29, and it is currently hovering around $85.56 a barrel.
On the other hand, Greece is struggling to avert default and receive the last year’s sixth tranche by 8 billion Euros after the EU summit, as Greece is facing huge strikes against new austerity measures that Papandreou declared and awaits a final second vote in parliament today in order to cut the budget deficit as required from the troika.
The Federal Reserve released yesterday the Beige Book which said that the economy maintained growth in the past period especially in September with modest pace of growth, but still the outlook remains full of doubts, the thing that reignited fears of slipping into a another recession in the future amid the high uncertainty for Europe.
All these factors from Europe and U.S. have damped hopes for the global economy, especially Europe and its crisis and whether leaders could find a way to contain the threat; by gathering these factors investors are afraid of betting on crude which remains uncertain despite that the EIA yesterday reported an unexpected drop in U.S. inventories last week by 4.7 million barrels, but negative data has dominated the market sentiment.
The EIA report showed that the U.S commercial crude oil inventories decreased by 4.7 million barrels from 1.3 million barrels rise previous week where it was expected to rise by 2.0 million barrels amid less demand from major economies.
All in all, volatility may remain dominant in markets amid high uncertainty caused by conflict with EU leaders adding more doubts on the ability of them to put a comprehensive plan in their crisis summit.