While oil and global markets go through a historic sell off, talk of a master plan to save Europe may slow the collapse of oil. Oil is still lower as reports about China’s service sector added to the sour mood that was set by a terrible U.S. jobs report on Friday and weakening manufacturing data in Europe along with weak data in India, South Korea and Taiwan. After it was reported that U.S. payrolls only increased by a paltry 69,000 jobs last month, the rout was on. The jobless rate rose to 8.2% from 8.1%, while hours worked declined. Add to that a failed auction in Spain and the world looked like it was ending. Panic trading was on and safety was all that mattered. It was obvious that the markets were screaming for action and the rout would not stop unless there were signs that something might happen.
Enter the master plan! Bloomberg News reported that the European Central Bank and the European Union are drawing up a “master plan” for the euro area aimed at strengthening the single currency, the German newspaper Welt-am-Sonntag reported, citing unidentified EU and ECB officials. The plan includes proposals to integrate euro members’ budget policy, create a “banking union,” a “political union” and to undertake common structural reforms, the newspaper said. Euro-area leaders commissioned ECB President Mario Draghi and three other EU leaders at a May 23 meeting to produce the blueprint by the end of this month, the newspaper said. A report on the so-called master plan will be included in the resolutions of the EU summit at the end of June, the newspaper said. The group of four will also be commissioned to create a “roadmap” for implementing proposals by the end of the year, it reported. Berlin warned against inflated expectations of the outcome, the newspaper said.”
Still the market rout has slowed as traders hope we will see the biggest shot of global economic stimulus since 2008. The Fed can’t ignore the dismal jobs report and China needs to stop the bleeding. Europe knows it can’t afford to wait.
We should see a draw in crude this week. Look for crude to be down 1.0 million barrels. Gas up 2.0 dist up 3.0 runs up 1.0.