|News||Crude oil rises since the opening of the week|
|Analysis||Crude oil extended last week's upside movements after speculation mounted that EU leaders would come up with a decisive plan for the debt crisis, as France and Germany are close to have an agreement on the overall EU debt crisis plan.|
Crude oil for December delivery opened the session at $87.14 and reached so far a high of $88.62 and recorded a low of $87.00, where it is currently trading at $87.87.
The European summit had made a great progress on Sunday in terms of the recapitalization of the European banks with 100 billion Euros in order to be strong enough to face the challenges that might occur in the near future amid the deepening debt crisis.
Also, they ruled out the ECB’s role in supporting the EFSF and the option is to create a special purpose vehicle to access private sector funds to fuel the bailouts, and other options include securing the new issued debt.
On the other hand, the Euro Zone finance ministers approved the sixth tranche for Greece, and it will have the EU’s part of it in the middle of November, since the IMF didn’t approve so far on its part, however, this decision is considered as a good progress for Greece that may prevent it from default.
Nonetheless, the final decision for the roadmap that EU leaders will present to solve the debt crisis and prevent Greece from default and the agreement that was already declared is to recapitalize the European banks with 100 billion euros, all these will be announced on Wednesday.
All these data from Europe are considered positive signs that Europe would act to ensure preventing contagion risks and support growth and avoid a Greek default amid rising debt and bad economic conditions, and stagnating growth in the region.
But let us not forget today’s data that showed much worse performance among different sectors in the continent, as Germany released the advanced reading for manufacturing and services PMI’s for October, as the PMI manufacturing contracted to 48.9 from the previous of 50.3, and services unexpectedly advanced to 52.1 from the previous of 49.7, better than the expected improvement of 49.9.
Along with the Euro zone’s PMI data, as manufacturing contracted further to 47.3 from 48.5 and services also dropped further to 47.2 from 48.8 in addition to the composite reading that slipped to 47.2 from 49.1.
The Chinese economy has released earlier today the figures for the HSBC Flash China Manufacturing (PMI) for October, where it showed an expansion by 51.1 compared with the prior contracted reading of 49.9, the better than expected expansion supported crude oil to rise in the asian session.
Crude oil is trading with a positive momentum since the opening of the week’s trading, but it might be volatile amid hopes from Europe and bad data that may put downside pressure; preventing it from rising more and more, but the positive momentum will likely continue to push crude oil prices to the upside ahead of Wednesday’s final plan that will clear the picture for investors.