With the increase in U.S. jobs pleasantly surprising markets Friday, but simultaneously disappointing with the uptick in unemployment from 8.2% to 8.3%, speculation remains mixed ahead of Federal Reserve Chairman Ben Bernanke’s speeches today and tomorrow.
China has been actively weakening the yuan (CNY, quote) recently in preparation for a falling dollar because of more economic stimulus measures. Due to this market action, major oil stocks such as Ecopetrol (EC, quote) and Sasol Ltd (SSL, quote) are becoming more attractive with dollar strength inversely correlated to the price of crude.
Market participants waiting for European Central Bank President Mario Draghi to reveal his plan to solve the euro zone crisis at 8:30 a.m. sent crude oil as high as $89.63. Within four minutes of Draghi’s statement containing no actionable plan, crude lost its gains and proceeded to the $86.92 level.
Growth commodities such as crude oil started the European session lower and into the U.S. session as traders pull their foot off the accelerator and become more cautious ahead of a slew of central bank meetings and scheduled statements this week. The usual speculation about additional easing (QE3) is the subject of the week.
The pressure that started weighing on commodity prices late last week is now in control of the oil market in particular as the euro zone leaps back into the world’s headlines.
Brazil’s oil industry and Petroleo Brasileiro S.A. (PBR, quote) have great potential. Petrobras shares have floundered in recent trading due to the falling price of oil (USO, quote), but this is still a dividend-paying stock with a huge upside. While Brazil still imports oil, the gap between domestic production and consumption is dwindling.
Crude oil is continuing lower on fears Spanish banks will need a significant bailout, furthering hampering growth and in turn slowing demand for the black gold.
Authoritarian government can have its advantages, and the Russian budget has traditionally been one of them.
Investors in commodities ETFs largely kept their money in place even as values fell sharply during the second quarter of the year.