Bullish sentiment brought about by speeches from Merkel and Bernanke proved to be short-lived as the focus returned to deficit problems in the Eurozone. Uncertainties were seen in Spain, Greece and Ireland. The OECD urged the EU finance ministers to increase the firepower to combat the crisis, saying member states need to deliver the mother of all firewalls' to impress the financial markets. The comment is echoed by the Eurogroup Chairman Junker. Wall Street slipped with the DJIA and the S&P 500 slipping -0.33% and -0.28% respectively. In the commodity sector, gold retreated after failing to test 1700 despite the Bernanke bounce with the Comex contract closing largely flat during that day.
In Spain, the government announced that it had run a deficit of 20.7b euro in the first 2 months of the year. Revenue dropped to 34.8B euro, down -1.3% from the same period last year. The elections in Greece will be held on May 6. European Commissioner Olli Rehn sait that the current pace of reform and adjustment are far from sufficient to make Greece's public finances sustainable or close the competitiveness gap', suggesting the new parliament will be under pressure. In Ireland, the referendum on the fiscal pact will be held on May 31. Despite favorable polling result, the markets may be triggered before the outcome.
Crude oil prices firmed amid news that South Africa stopped oil purchases from Iran, the biggest supplier of the country, in January amid pressure from the US and its allies on sanctions against Iran. The overshadowed the rise in crude oil prices and reports that the US was considering releasing SPR.
Concerning US oil inventory, the industry-sponsored API estimated that crude oil inventory rose +3.6 mmb in the week ended March 26. For fuels, gasoline rose +1.3 mmb while distillate fell -1.4 mmb. Official data from the DOE/EIA will probably show that crude stock gained +2.6 mmb while both gasoline and distillate inventories fell last week.