Oil prices dropped earlier in the day amid rumors that the US and the UK have reached an agreement on releasing strategic reserve. Both nations later denied that a deal has been reached. Oil then rebounded. Impressive US economic data also helped reverse the losses made initially. The front-month contract for WTI crude oil plunged to a 1-month low of 103.78 before rebounding to 105.11, down -0.30%. The situation in Europe remained uncertain. The IMF finally approved the 28B euro rescue package to Greece. Yet, the lender continued to warn that the risks to the Greek recovery program 'remain exceptionally high'.
Oil prices have been staying $100/bbl for most of the time since February due to tensions over Iran and expectations of higher demand. The relentless rally last month triggered worries that the strength in oil price would dampen global economic growth. At the meeting between the US President Obama and the UK Prime Minister Cameron at the White House, the 2 leaders discussed about means to alleviate the issue. The market had speculated that they would reach a deal to release strategic reserve to increase supply. However, both parties denied any agreement has been reached and stated that there's no quick fix for high oil/gas prices.
In the UK, the sterling was under pressure after Fitch's cut the country's outlook to 'negative' from 'stable, signaling a 'slightly greater' than 50% of chance that it would lose its AAA rating in 2 years. In the Eurozone, the IMF approved a 28B euro loan for Greece as part of a second bailout with 1.65B euro immediately available under the new arrangement. Separately, Spain sold 976M euro of 3.25% notes due April 2016, at 3.37%. The response was positive with a 4.13 bid-to-cover ratio, compared with 2.21 when the notes were sold in January.
Concerning the dataflow, the US initial jobless claims slipped -14K to 351 K in the week ended March 10. The claims in the prior week were, however, revised higher to 365K. Continuing claims dropped -81K to 3343K. Empire State Manufacturing Index climbed to 20.2 in March from 19.5 in the prior month while the Philly Fed Index improved to 12.5 from 10.2 in February. The US inflation data will be released later today with the headline CPI probably stayed unchanged at +2.9% in February while the core CPI eased to +2.2% from +2.3% in Janury.