Market sentiment driven by the upbeat US employment report proved to be short-lived as concerns over debt problems in Greece emerged. The euro slipped in Asian session as an agreement between the debt-ridden European periphery and the EU/IMF/ECB troika on the second package worth of 130B euro has not been reached although Greece is required to settle its bond repayment worth of 14.5B euro by March 20. Gold fell last Friday as the US dollar strengthened. The benchmark contract remained under pressure and continued to trade below Friday's close of 1740.3. Oil prices moved without direction. Brent crude initially rose higher amid intensified tensions over Iran. Gains were pared as concerns over Greece, and generally the situation in the Eurozone, weighed on the demand outlook.
The EU/IMF/ECB troika required Greece to accelerate its austerity measures to reduce its sky-high deficits. Prime Minister Lucas Papademos stated that the coalition leaders had agreed to cut public spending by 1.5% of GDP through wage cuts, pension adjustments and bank recapitalisation. However, the troika apparently required more commitments. A final response has to reach the troika by midday on Monday. The focus will remain on Greece later this week as a final sign-off by the Eurogroup on the PSI negotiations is due Thursday ahead of the official PSI process starting next Monday.
Over the weekend, there have news regarding Israel's possible attack on Iran within months. Referring to news on Thursday about Israel's strike on Iran, French President Nicolas Sarkozy said in an interview that 'some in Israel are seriously considering' military intervention if 'Iran continues its senseless race to get the bomb and continues to threaten its neighbors'. However, the US President Barack Obama later tried to downplay the news and said that Israel has not 'made a decision on what they need to do' yet. He also mentioned that the impact on oil prices would be big should there be any additional military activity inside the Gulf. The US and Israel are divided on the timing of the potential attack on Iran.
Commitments of Traders:
With the exception of crude oil, speculators were bullish towards the energy complex in the week ended January 31. Net length for crude oil futures decreased -7 146 contracts to 170 699. Net length for heating oil climbed +3 035 contracts to 21 909 while that for gasoline rose +6 189 contracts to 83 872. Net short for natural gas futures dipped 14 293 contracts to 126 903.
Speculators were bullish on precious metals. Net length for gold futures added +29 136 contracts to 171 359 while that for silver soared +2 974 contracts to 19 091. For PGMs, net length for platinum gained +2 892 contracts to 24 976 while that for palladium gained +1 024 contracts to 8 695.