Crude declines amid bad data from Europe
Crude oil is trading within a narrow range since the opening of today's session after it rose yesterday with API report that reported a slid in U.S. stockpiles, which affected crude prices positively and pushed it to the upside despite the European crisis the weighing on crude oil. Today, crude affected by the mixed sentiment that appear in world markets, as investors are looking for any bullish data that may help markets, especially oil and give it a positive momentum amid the deepening debt crisis in Europe and fears of contagion risks on other European countries. Until now, all data that released from Europe have showed a slowing pace of growth across different sectors which put more negative pressure on crude since it is a growth sensitive commodity, and the current fragile global growth in general, and Europe in particular affected by its crisis which prevent growth to have positive momentum, on the other hand, the final reading of GDP in UK has showed a slower than expected growth during the second quarter to grow at 0.1% pace. Oil for November delivery is currently trading around $77.18 a barrel after recording a high of $78.44 and a low of $77.35 after it opened the session at $77.98. European Union finance ministers are considering ways to recapitalize the financial institutions after they agreed that additional measures were urgently needed to support the region's banks amid the deepening crisis, afraid from another credit crunch to occur. Moody's rating agency has downgraded the Italian government bonds' rating by three notches to A2 from Aa2 and put it on a negative outlook and rising risks for euro-area sovereigns, especially that Italy handles the largest debt in the euro zone, as Moody's explained, and after that, the rating agency said that other European countries with lower debt rating than top Aaa could face cuts. Moody's decision to cut the Italian bonds rating amid the deepening debt crisis was not the surprise for markets, as the Italian prime ministers said it was expected, as the Standard & Poors rating agency has already downgraded Italy's rating by one notch on 20th of September. However, it had a huge effect on European markets and global markets as well, and increased fears over possibilities that Greek crisis could move to the other debt-laden countries, and the European leaders will not be able to contain the crisis, as Greece is considered a small economy comparing to Italy and Spain that are a much bigger economies. Volatility may dominate global markets amid mixed sentiment among investors, and crude will continue its fluctuations today ahead of the EIA report that may show a rise in the U.S. crude inventories by 1.5 million barrels, which may affect oil negatively, an addition to the deepening crisis in Europe which remain the main focus for investors.
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