WTI crude oil prices continue to trade flat as investors wait to see if Spain will formally request a bailout and initiate a European Central Bank bond-buying program.
WTI crude oil price continues to trade slightly higher in the $2.07 range on the first session of the fourth quarter. Price has been holding on positive comments from European Union Commissioner Olli Rehn about the Spanish banking system’s stress tests, suggesting the euro zone debt crisis could be contained.
Federal Reserve Chairman Ben Bernanke did not introduce a third round of quantitative easing (QE3) in his speech at Jackson Hole on Friday. But he did put forth the framework for what one analyst termed “QE forever” — which could lead to permanently high oil prices.
Brazilian oil and natural gas company Petroleo Brasileiro (PBR, quote) (a.k.a. Petrobras) has rebounded recently, up 8.12% for the week and 17.35% for the month. Over the same time periods, the main exchange traded fund for oil, United States Oil (USO, quote), has risen by 2.29% and 8.23%, respectively.
Crude oil is heading lower into the weekend after disappointing data stretched from China’s export/import figures to the U.S. import price index; all adding to yesterday’s pressure from the European Central Bank statement observing deterioration.
Commodity pairs are three currency pairs that allow investors to expose your portfolio to the commodity markets. They are mainly based on the widely traded currencies of countries with large commodity sectors: Canada, Australia, and New Zealand.
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.