Cease fire hopes rise along with the oil market. Secretary of State Hillary Clinton makes her way to the Middle East to broker what more than likely will be a cease-fire between Israel and Hamas. With an Israeli ground offensive most likely averted the focus will go back to the global economic outlook and something as mundane as weather.
Moody’s downgraded France ahead of a big meeting today in Brussels as the EU and the IMF try to decide whether Greece is worthy of more bailout cash. The French downgrade was not that much of a surprise but Moody’s was very critical of French President Francois Hollande. Not only did they warn of possible further downgrades, they said, “France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand” and “structural rigidities” in the longer-term.
According to Reuters, “Eurozone finance ministers are likely to give tentative approval for the next tranche of loans to Greece on Tuesday although the money is unlikely to be disbursed before December and a deal on debt reduction may also require further talks. Officials familiar with preparations for the finance ministers' meeting expect a "political endorsement in principle" on unfreezing loans to Athens, after Greece completed almost all the reforms that were required of it in exchange for funding. The final go-ahead from the ministers is likely to come only once the remaining few Greek reforms are in place and once there is agreement in the Eurozone on how to reduce the country's huge debt and secure extra financing while it is being done.
While the market's focus is on Greece, it also took a stand on the violence that plagues Syria. The EU, according to the Huffington Post, gave a vote of confidence to the newly formed Syrian opposition, a movement struggling to prove its credibility and gain the trust of splintered factions. The endorsement of the coalition as a legitimate voice for Syria's people represents a major step forward in the West's acceptance of the group, even as fast-moving events and fluid alliances are casting doubts on the direction of the rebellion. "The EU considers them legitimate representatives of the aspirations of the Syrian people," the bloc's 27 foreign ministers said in a statement at the end of their monthly meeting. They stopped short of offering official diplomatic recognition because that can only be decided by each member country individually.
Gas prices hit the lowest level since July 16, down 9.9%, according to the Energy Information Agency echoing what Trilby Lundberg had already told us. Still the EIA wrote that that there are market stresses caused by Hurricane Sandy. Last week we saw in the Northeast Petroleum Administration in states like, New York, New Jersey, Pennsylvania, and Delaware, we saw reduced gasoline deliveries as Sandy significantly disrupted electricity, natural gas and petroleum product supply infrastructure in the Northeast and affected millions of consumers. Yet that was partially offset by reduced demand. This week the Northeast will be key as demand in that region should start to rebound as we head toward the next phase of the disaster and that is the rebuilding phase. That could help prices in the Northeast be more susceptible to price increases.
We also have to focus on the blast of winter that is hitting parts of Europe! Barbara Powell of Bloomberg wrote that the approaching cold finds U.S. distillate stocks at the lowest seasonal level since 2000 and gasoil supplies at an 11-month low, increasing demand for U.S. cargoes. U.S. inventories of distillates, including heating oil and diesel, dropped 2.2 percent in the seven days ended Nov. 16 to 115.5 million barrels, the lowest for this time of the year since 2000, Energy Department data show. Sections of Western Europe, including the U.K. and Spain, will probably face lower-than-normal temperatures in the next three months, forecaster WSI Corp. said. In the U.S., December’s weather will start off cooler than normal along the U.S. East Coast, said Matt Rogers, president of Commodity Weather Group LLC. Winter, measured by meteorologists from Dec. 1 to Feb. 28, may be 21 percent cooler than last year in terms of natural gas-weighted heating degree days, Rogers said. Last winter was the fourth-warmest on record in the contiguous 48 states. Heating oil’s premium to West Texas Intermediate crude on Nymex jumped $1.60 to $40.45 a barrel. The gasoil crack spread over Brent oil on ICE jumped $2.12 to $17.03 a barrel.