Oil focused on Europe, inventory secondary

Quote of the Day

Freedom lies in being bold.

Robert Frost

Yesterday's massive risk asset sell-off was all about Greece first scheduling a referendum to vote on the EU bailout plan by the population and then an indication that the referendum vote was off. First it continues to be all about Europe as I have been discussing followed by the 30 second news snippets that have been rocking the market and causing an extremely high level of volatility in oil, equities and most other commodity market values. As mentioned yesterday the next big event (unless another surprise emerges from Europe today) will be the G20 meeting beginning on Nov. 3 in France. Europe is certain to be at the top of the agenda as will discussions as to what will evolve with Greece. There will also be meetings today between key European leaders and Greek Prime Minister Papandreou which is certain to result in more market moving news snippets hitting the media airwaves.

In addition to Greece the macroeconomic data this week...especially the manufacturing data....has underperformed versus expectations as well as last month's data. A slowing of the recovering in manufacturing is a negative for oil consumption as well as most other commodity consumption levels. Today the pre-jobs data starts to hit the media airwaves with the Challenger layoff report and ADP private sector job survey. Also at 2:15 PM EST the results of the US Federal Reserve FOMC meeting will be announced with all eyes and ears focused on the Fed's intent (or non-intent) on quantitative easing. Needless to say today's trading sessions will be volatile and reactive to the macroeconomic data, the Fed and anything that may come out of the meetings in Europe with the Greek Prime minister.

The Greek escapade had a strong negative impact on not only on oil and other commodity values but also on the global equity markets as shown in the EMI Global Equity table below. The Index is now down 3.3% on the week and has given back more than half of last week's 5.8% gain. The US Dow is barely holding on to its year to date gain of just 0.7% with seven of the 10 bourses back to showing double digit losses for the year. It is very difficult for investor/traders to get very comfortable with the equity markets as the situation in Europe is continuing to unfold and the cloud of uncertainty enveloping the global economies is continuing to widen.

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