Gloom and doom is taking hold Monday on global markets and oil falls and gold rises.
Recession fears are rising as the European stock markets hit 15-month lows, raising more concerns about global energy demand. In China they are celebrating the Chinese New Year, so other Asian markets were higher, but oil is fighting a negative mood. The Sentix European confidence index saw investor sentiment hit a gloomy 10-month low in February, dropping from 9.6 to 6.0. The sub-index of economic expectations hit its lowest level since Nov. 2014, sliding from 6.3 to just 1.5. Oil, of course, does not want to see a weakening in investor confidence anywhere.
The crude oil market is also losing confidence of an OPEC/non-OPEC production cut. Reuters reported that Saudi Arabia's oil minister Ali al-Naimi discussed cooperation between members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers to stabilize the global oil market with his Venezuelan counterpart on Sunday, but there was no sign any agreement had been reached to hold an early meeting of suppliers.
"It was a successful meeting and (conducted) in a positive atmosphere," Saudi news agency SPA cited Naimi as saying. Venezuela's oil minister Eulogio Del Pino, who is on a tour of oil producers to lobby for action to prop up prices, said his meeting with Naimi was "productive." But does productive mean less production? The market thinks not, at least right now.
This comes as speculators have flocked to oil on both the long and short side. Hedge funds open interest hit 497,280 in crude oil and is the highest since the U.S. Commodity Futures Trading Commission began tracking the data in 2006, according to Bloomberg News.
Love those euros! Obama took a high risk in lifting sanctions on Iran. Now Iran is now saying they want to be paid in euros for their oil. Reuters reported Iran wants to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros, and is billing new crude sales in euros, too, looking to reduce its dependence on the U.S. dollar following last month's sanctions relief.
A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total, Spanish refiner Cepsa, and Litasco, the trading arm of Russia's Lukoil. "In our invoices we mention a clause that buyers of our oil will have to pay in euros, considering the exchange rate versus the dollar around the time of delivery," the NIOC source said.
Trilby Lundberg says gas prices are continuing to fall. In the widely followed dean of gas surveys, Lundberg says that the average price of a gallon of gasoline in the United States fell 8.2 cents in the past two weeks to its lowest level in seven years. Trilby Lundberg says that the regular grade gas fell to around $1.82 per gallon in the Feb. 5 survey from $1.91 on Jan. 22, when the previous survey was taken.
The price was the lowest since Jan. 9, 2009, when it was roughly $1.78. Lundberg says the latest price was 37 cents lower than a year ago as competitive pressures prompted refineries to drop wholesale gasoline prices amid weak oil prices, according to Reuters.