|News||Crude extend the bullish run into third session this morning|
|Analysis||Crude oil futures are trading with an upside bias into the European session with continued focus on the debt-laden Greece, the progress among the G20 leaders, and U.S. jobs report all supported by relief that the Greek referendum will not take place.|
Crude oil built on yesterday’s gains when the contracts rallied 1.7% on news that Greece will not hold the referendum and Prime Minister Papandreou stepped back from the call with agreement that the opposition will back the new EU bailout.
December futures are currently trading higher by 0.17% at $94.22 rebounding from the low of $93.60 and off the high set at $94.49 a barrel.
Investors are closely watching the developments in Europe with one eye on Greece and the other on Cannes. The progress seen is that Greece might avert default for now and go back to the only accepted path, which is the EU support and bailout and avoid falling out of the euro. Papandreou said that it was never about the referendum and backing from the opposition for the new bailout and the consensus negates the need for the referendum, and finance minister Evangelos Venizelos also said to lawmakers in Athens yesterday that the referendum will not be held as he lead the opposition in the part against the premier.
Still, the eyes remain on a confidence vote in parliament in Greece, where reports said that if the government wins the confidence vote Papandreou agreed to step-down to make way for a coalition government to secure the political stability and avoid political vacuum or early elections for now. The government should secure the agreement for the new bailout and that is the paramount importance before they take the decision to hold new elections.
Markets found the news positive, and the race to contain the crisis a positive indication that might save the global economy from landing into a deep harsh recession. They also welcomed the ECB’s decision to cut rates for now to ease the economic downturn, especially as Draghi said that Europe might be heading to a mild recession.
The developments in Greece and continued efforts from the G20 leaders to contain the crisis are supporting hope in the market and continued crude gains. The leaders ended their first day of meeting with the debt crisis still dominating the agenda, as they feel the recent setback in Greece forced European leader to miss the deadline given and talks focus on utilizing global support to ease the strain and protect systemic nations by expanding the fire power of the IMF.
We see the markets struggling still amid the high uncertainty over the outlook and with the never ending Greek drama. So far the progress is supporting the market and the final event will be a break or make for markets, the infamous jobs report from the United States.
Investors have been eyeing good macroeconomic data from the US economy which eased the woes of recession. The data today can have the support for crude’s rally to continue or reverse again south.
The market expects 95 thousand jobs gain and unemployment to linger at 9.1% and any better than expected data will have for sure a positive impact on the market while weak numbers on the contrary can erase the rally seen the past sessions, especially as we come to the end of the week and uncertainty is still governing the final call from the G20 which will surely come after markets close for the weekend today.
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