Oil prices dragged lower by falling equity prices

Quote of the Day

Money is hard to earn and easy to lose. Guard yours with care.

Brian Tracy

A choppy trading market as all of this week's events slowly begin to surface. That said Greece is by far still the number one market price catalyst and will remain the main issue for the foreseeable future. Talks between Greece and its main lenders are making progress with the next round of meetings scheduled for early next week. The EU/IMF missions are the ones that will recommend whether or not Greece receives its next or sixth round of bailout funds. As much as many in the market believe that a Greek default may be the best long term course of action I do not think the Europeans are ready for the contagion exposure if Greece does in fact default. Thus I believe Greece will get its next round of financing and all will be well in euro land for a few weeks or maybe even a month. Even if Greece gets its next round of money the problem will not be solved and the issues will be pushed forward to disrupt the markets yet another day in the future.

On the other side of the Atlantic the US Federal Reserve convened their two day FOMC meeting as they attempt to figure out what action they may take to put a little spark in the US economy that seems to be heading for another bout of recession if it is not already there. Today the IMF came out with their latest on the global and US economy and in all cases they downgraded their projections for global GDP to 4% for 2011 and 2012 versus 4.3% and 4.5%, respectively versus their June forecast. In addition they lowered their growth projections for the US to 1.5% for 2011 from 2.5% versus their June projections. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing,” the IMF said in its World Economic Outlook report today. In Europe “leaders must stand by their commitments to do whatever it takes to preserve trust in national policies and the euro” while in the U.S. “deep political divisions leave the course of U.S. policy highly uncertain.” The Washington-based IMF said it based its forecasts of a “modest pickup of activity” in advanced economies and of “robust growth” in emerging counterparts on the premise that European policy makers implement the measures to reinforce their bailout mechanism agreed on in July. It is kind of a good news, bad news forecast. Bad news suggests a weakening global economy...good news they are not yet forecasting a return to a recession in the developed world. Translated to oil demand growth this forecast should result in the forecasting agencies (IEA, EIA, OPEC) likely lowering their oil demand growth forecast when they issue their next monthly forecast in October.

Page 1 of 7 >>
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome