Commodity Blog

Posts Tagged ‘ECB’

Following a deep 3-day fall caused by the liquidity crisis combined with the global risk aversion, oil is now rising for the second day in a row. The commodity recovered to above Thursday’s open close level and last Wednesday’s high.

Although the extent of the recovery is impressive — more than 4.5 percent from the yesterday’s low, the reasons for this growth aren’t. Oil gained along with the rest of the commodities and stocks inspired by the speculations regarding the Greek debt crisis. After the US Federal Reserve refused to pour extra money into the world’s financial system, it’s now ECB‘s turn to raise or ruin the markets. If the European officials come to an agreement and the eurozone’s central bank will have its hands untied to provide more help (print more money) for the troubled states, the crude oil will be among the most benefiting assets.

While many analysts believe that it’s a viable reason to bet on oil (among the other oversold commodities), some warn the market participants about the possibility of the unfavorable outcome of the events. If Greece has to declare a real default or if some of the eurozone’s members will have to leave the union, the catastrophe for oil may be even worse than the 2008 financial crisis fall.

Brent oil blend went up from $104.63 to $106.27 per barrel on the spot market as of 17:50 GMT today. A monthly low of $101.66 was reached yesterday for this energy commodity.

Commodities from oil to copper tend to gain because of the world economy recovery. Commodities jumped 15 percent this year as countries worldwide spur their economies and companies cut investment in mines and oil rigs. The world economy will grow 2.5 percent in 2010 according to the International Monetary Fund. Crude oil increased 60 percent this year to $71.23 per barrel on the New York Mercantile Exchange. The London Metal Exchange index of six metals jumped 67 percent to 2,880.

Crude oil stabilized as U.S. job losses slowed and the unemployment rate dropped. U.S. stockpiles decreased last week as demand rose. The jobless rate dropped to 9.4 percent from 9.5 percent. September delivery for crude oil gained $0.09 to $72.03 per barrel by 11:33 on NYMEX.

The European Central Bank and 18 other banks agreed to a five-year cap on gold sales in attempt to prevent gold dumping. European central banks agreed to sell no more than a combined 400 metric tons of the metal a year through September 2014. As the International Monetary Fund didn’t sign this agreement and have plans to sell 403 tons from its reserves there is possibility that Chinese, Russians or another central bank would buy the 403 tons of IMF gold in one go. Delivery for gold in London dropped 0.8 percent to $955.92 per ounce as of 15:14 local time today.