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Crude oil rises since the opening of the week |
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| Forecast |
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| Analysis |
Crude oil extended last week's upside movements after
speculation mounted that EU leaders would come up with a
decisive plan for the debt crisis, as France and Germany are
close to have an agreement on the overall EU debt crisis
plan. Crude oil for December delivery opened the session at
$87.14 and reached so far a high of $88.62 and recorded a low
of $87.00, where it is currently trading at $87.87. The
European summit had made a great progress on Sunday in terms
of the recapitalization of the European banks with 100
billion Euros in order to be strong enough to face the
challenges that might occur in the near future amid the
deepening debt crisis. Also, they ruled out the ECB's role in
supporting the EFSF and the option is to create a special
purpose vehicle to access private sector funds to fuel the
bailouts, and other options include securing the new issued
debt. On the other hand, the Euro Zone finance ministers
approved the sixth tranche for Greece, and it will have the
EU's part of it in the middle of November, since the IMF
didn't approve so far on its part, however, this decision is
considered as a good progress for Greece that may prevent it
from default. Nonetheless, the final decision for the roadmap
that EU leaders will present to solve the debt crisis and
prevent Greece from default and the agreement that was
already declared is to recapitalize the European banks with
100 billion euros, all these will be announced on Wednesday.
All these data from Europe are considered positive signs that
Europe would act to ensure preventing contagion risks and
support growth and avoid a Greek default amid rising debt and
bad economic conditions, and stagnating growth in the region.
But let us not forget today's data that showed much worse
performance among different sectors in the continent, as
Germany released the advanced reading for manufacturing and
services PMI's for October, as the PMI manufacturing
contracted to 48.9 from the previous of 50.3, and services
unexpectedly advanced to 52.1 from the previous of 49.7,
better than the expected improvement of 49.9. Along with the
Euro zone's PMI data, as manufacturing contracted further to
47.3 from 48.5 and services also dropped further to 47.2 from
48.8 in addition to the composite reading that slipped to
47.2 from 49.1. The Chinese economy has released earlier
today the figures for the HSBC Flash China Manufacturing (
PMI
) for October, where it showed an expansion by 51.1 compared
with the prior contracted reading of 49.9, the better than
expected expansion supported crude oil to rise in the asian
session. Crude oil is trading with a positive momentum since
the opening of the week's trading, but it might be volatile
amid hopes from Europe and bad data that may put downside
pressure; preventing it from rising more and more, but the
positive momentum will likely continue to push crude oil
prices to the upside ahead of Wednesday's final plan that
will clear the picture for investors. |
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.