Brent oil futures open today’s trading session hovering around the $110 price level after late night negotiations in Europe resulted in a new three point Euro debt deal which is hoped will contain financial problems in EU countries and boost markets.
Latest Brent Oil Price
In London, Brent crude oil futures for December 2011 delivery was trading at $110.49 a barrel, 07.35 GMT this morning on the ICE Futures Exchange. The European contract ended Wednesday’s session at $109.20, or lower by 1.6 percent.
Euro Debt Deal
Eurozone leaders said on Thursday they had reached agreement after late night talks on measures to tackle the debt crisis. The deal calls for banks to accept a 50 percent losses on Greek debt and increases the firepower of the rescue fund to about €1 trillion.
“I attribute the edging up of oil futures to some apparent progress in the discussions in Europe regarding the European debt crisis,” said Victor Shum of Purvin & Gertz.
“If they extend the EFSF, that’s obviously positive and will reduce some of the risks that we have in the European market. Anything they can do to create consumer power and growth would translate into better commodities prices.” said Jeremy Friesen, Commodity Strategist at Societe Generale.
However many analysts remain concerned that the details of the deal remain patchy at best and markets remain unsettled.
“The commodity market is cheering it at the moment but they shouldn’t be. Higher commodity prices will make it a lot harder for these economies to try and get out of the problems they’re in. It’s a knee jerk reaction to buy commodities when the dollar goes down, that’s what we’re seeing, but in my mind it will eventually defeat the purpose if the dollar continues to weaken.” according to Jonathan Barratt of Commodity Broking Services.
Brent Oil Price Forecast
“Global oil supply is extraordinarily tight, creating the risk that prices will exceed forecasts.” according to Goldman Sachs.
Restrictions on output growth in Libya and Iraq, two of the main sources of additional production, will strain the availability of oil next year, Jeff Currie, Goldman’s head of commodities research, said yesterday in London. Brent oil prices may surpass the bank’s 2012 average estimate of $120 a barrel, he said.
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Brent oil price hovers at $110 after Euro debt deal confirmed
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