|News||Oil declines amid uncertainty from Europe and slowing manufacturing in China|
|Analysis||Crude oil is trading negatively extending yesterday’s losses after China reported showed slowing manufacturing growth unlike the expectations, and on the European side, the Greek prime minister raised fears and concerns after he unexpectedly called for a referendum on the new bailout package.|
Late yesterday, the Greek PM George Papandreou unexpectedly announced that a referendum would take a place on the new bailout, after the EU leaders agreed to raise the new bailout to be 130 billion Euros along with the haircut on the Greek bonds by 50%.
The announcement from Greece fueled the uncertainty in markets and renewed fears and concerns for global markets unwidning any hope seen after the EU leaders announced a plan that may contain the crisis a prevent it from spreading; this announcement now made it much difficult on EU leaders, where economists see that it would hurt Europe.
Crude declined significantly after this announcement that made the outlook for Europe unclear, which will hurt the whole economy if the referendum said no to the package, which will curb the future oil demand from Europe and globally as well.
Crude oil for December delivery opened today’s session at $92.55 and reached a high of $92.84 and declined to reach so far a low of $91.19, where it is trading negatively around $91.22.
On the other hand, China’s PMI manufacturing showed slower growth, which will hold down the global recovery train since China is one of world’s leading economies that affects global growth significantly, and any slowdown will reflect on global growth.
The Chinese PMI manufacturing for October fell to 50.4 from 51.2 points; also it came below expectations of 51.8 points.
Also, the Reserve Bank of Australia cut the borrowing rate by 25 basis to 4.50%, where it referred to the escalating European debt crisis and its downside pressures on growth and global stability, which intensified the fear in the market that the outlook is worsening and the crisis is spreading.
Volatility will remain evident in today’s trading amid all these factors, but crude will be volatile with negative momentum due to all these negative factors, but as we said volatility would take place ahead of the British GDP that will be released today adding further weak clues to the outlook.