|News||Crude oil pressured after the death of North Korea leader|
|Analysis||Oil started the week with continued downside pressure with the prevailing uncertainty over the global economic outlook and mounting debt woes after France was put on negative watch and Draghi reiterated his resistance to bond purchases. The downside pressure intensified further with the heavy losses in Asian markets on evident fear over the outlook in the Korean Peninsula after the death of North Korean leader Kim Jong-il which supported haven demand on the dollar and pressured the commodity lower.|
Crude oil futures for January settlement are currently trading bearishly around $92.87 per barrel down 0.71% from the opening levels of $93.76 the highest recorded and declined to the low of $92.54 per barrel.
The market is still evidently strained on the late Friday news from Fitch that put France on a negative watch and threatened to cut the nation’s credit rating, while the ECB’s President Mario Draghi added to the pressure by reiterating his opposition to using the ECB as the lender of last resort and to step in with wide bond purchases to save indebted nations.
With the already evident strain and jitters the market extended the losses this morning on the news that North Korean leader Kim Jong-il died which took its toll on Asian stocks and sent the dollar higher on fear of the near-term direction and political stability in the region, especially as the Korean Peninsula tension and the government statement called on North Koreans to “loyally follow” his son Kim Jong Um which still pushed South Korea’s Kospi index down the most in five weeks.
The dollar gained more ground on the news on haven demand especially against Asian currencies as the USDIX trades higher now at 80.32 rising 0.23% from the opening of 80.20 and after setting the high of 80.49.
We still expect the news to dominate the market with volatility and pressure already frail European markets. The lack of major data today will keep the eyes on developments in Korea and also on Europe as the Finance Ministers are expected to hold a conference call today to continue the discussions on the Brussels summit outcome and the IMF pledged loans which they need to finalize hopefully before the holidays.
It is the star of the week before the holidays and we can see the trend in the market slowing and the majority sidelined ahead of the holidays hoping for clarity to start on strong foots in the new year.