Despite the delay of a meeting between Greece and the IMF/EU/ECB troika due to 'missing paperwork' and the unexpected decline in Germany industrial production, market sentiment was buoyed as a the Greek deal is expected to be finalized soon. Fed Chairman Ben Bernanke reiterated what he said before at the testimony before the Senate Budget Committee signaling the monetary stance has not been changed after the January employment report. Wall Street gained with DJIA and S&P 500 Index rising +0.26% and +0.20% respectively. In the commodity sector, the prompt contract for WTI crude oil jumped to a 4-day high of 99.13 before settling at 98.41,up +1.55%, probably due to DOE/EIA's upgrade of its oil demand forecasts for 2012 and 2013. Brent crude however erased gains made earlier in the day due to profit-taking.
Greece is under pressure to secure a new tranche of the bailout fund worth of 130B euro as it has to settle its debt in March. However, disagreement remained on how much more deficit the debt-ridden country has to cut. The Greek government has accepted to cut 15 000 state jobs in 2012. It will also cut 2012 spending by a further 3.3B euro. The meeting was postponed again to Wednesday with one leader blaming the delay to 'missing paper'. The Greek coalition hesitated to accept more budget cuts as it would further affect the living standard of people and protests get more intense in recent days. In Germany, economic data released was disappointing with industrial production unexpectedly contracting -2.90% m/m in December, accelerating from a -0.6% drop a month ago.
At the testimony before the Senate Budget Committee, Fed chairman Ben Bernanke stated that the US economy still has 'a long way to go before the labour market can be said to be operating normally' and 'particularly troubling is the unusually high level of long-term unemployment'. Despite the drop in unemployment rate in January, it remained high and probably will take a few years to reach the 7% level. This was probably the main reason for Bernanke not to change his monetary stance.
Concerning the oil market, positive news came from the DOE/EIA which said that oil demand growth for 2012 will increase to 1.32M bpd, up +0.05M bpd from previous projection. Growth in 2013 was revised +0.02M bpd higher to 1.49M bpd. The industry-sponsored API estimated that oil inventory declined -4.50 mmb in the week ended February 3. Stockpiles for gasoline and distillate, however, climbed +4.40 mmb and +0.39 mmb respectively. The market anticipates the official report from the DOE/EIA will show addition in all 3 oil categories.