|News||Crude Oil moves lower as the week begins on European fears|
|Analysis||Crude oil continues to suffer further losses as the week begins; its price stabilized over $94.00 per barrel in the Asian session, after three consecutive sessions of gains, yet with the intensified jitters in Europe the contracts head lower with the start of the new session and trading bearishly at the time.|
Crude oil futures for December settlement are currently trading lower by 0.69% at $93.61 after setting the high of $94.96 and the low of $93.50 a barrel. Oil is pressured with wide losses for equities with the start of the European session on fears over the outlook for the euro area stability and the downside pressures on growth.
Crude oil shifted to the downside with the start of European trading after a more stable session in Asia, as the markets await Greek's announcement regarding the new leadership and rescue plan that shall prevent it from tumbling into bankruptcy, which would be the last hope for Greek in remaining a member in the E.U.
The E.U. leaders' announcement for a new rescue plan for Greek had a significant positive effect on the financial markets. Equities have risen significantly as well as investors' demand increased on buying higher-yielding currencies and risky assets such as crude oil.
Nevertheless, things took a strong shift to the worst last week with the political instability in Greece, and even as now we moved away from referendum and they agreed on a coalition government with Papandreou stepping down, the fear is still seen especially as debt woes rise in Italy.
Investors await a critical vote in parliament from Italy tomorrow and the prime minister is losing party support for the 2010 budget that might be a new setback for another indebted nation that is now under IMF and EU surveillance.
The outlook for crude oil prices in the coming period remains mixed with downside pressures as depends on the current developments in the global economy. European debts problem and the lackluster in the industrial sector in China, in addition to the lagging growth in the U.S., all are key factors in affecting crude oil prices in the coming period and for now investors are betting on rising downside pressures.
Still the US dollar effect on crude oil prices is strong, and the above mentioned crisis will also participate in determining the direction of the US dollar, which the crude oil will have its opposite.
Today the USDIX rallied strongly to the upside to add more pressure on oil where the index is currently trading bullishly at 77.27 adding 0.46% from the opening of 76.91.
More volatility and fluctuations are expected today with the continued focus on Europe and the euro area finance meeting, especially as they should start detailing how the EFSF expanded powers will work and what comes next to shelter Italy and Spain from rising market pressures.
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