Crude oil declined today amid poor fundamentals around the globe and ahead of the Slovakian parliament’s vote on expanding the EFSF, as investors are concerned over the vote whether the parliament will agree on measures or not.
Uncertainty has appeared in markets, ahead of the Slovakian vote and after the EU leaders delayed a crisis summit to 23rd of October, due to opposition for the German Chancellor that cause more than suggested Greek debt writedowns, as leaders are looking for rescuing the European banks.
Crude oil futures for November settlement are trading lower this morning at $85.81 recording the high of $85.82 and the low of $84.66 a barrel, where it is currently trading at $84.74, removing yesterday’s gains.
Although, Merkel and Sarkozy plan that is expected to be released before the end of this month, has erased fears that were evident in markets in the last period, as we saw a correction in global markets after their plan that increased speculations on European leaders to solve the crisis.
Nevertheless, fears and concerns are remain evident in markets over the deepening debt crisis in Europe, and how leaders would solve this crisis amid the slowing pace of growth in the continent, where the ECB chairman Trichet, referred to rising risks of contagion from the debt crisis, which indeed, made investors worried over the outlook for the European economy.
All these factors are weighing down crude oil and push it to the downside, after a five days rally that pushed crude from the lowest levels recorded in several months to reach at the current time $84.87 amide improving labor sector in U.S. along with hopes that Europe is able to contain the crisis, however, despite these efforts from leaders to contain the crisis, they cannot hide the fact of Europe, which is threatening the global economy, and accordingly, the future demand on crude would heavily decline.
Volatility may dominate global markets and we will see it on crude trading but with a negative momentum, ahead of the Slovakian vote which may have a positive effect on markets, but on the other hand, if the parliament refused to accept the measures, we will see a huge drop in global markets.
Poor fundamentals are making any comment from any European leaders important, and maintain the focus on Europe, to watch and see if leaders could provide more and sufficient measures to keep debt crisis in a box preventing it from spreading to other European countries.