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Markets will continue to react to the disappointment from ECB. Most of the equities indices are expected to trade down as ECB failed to give any action plan. The euro is trading under pressure at 1.2174 level driven by rising concern of unresolved debt problem. Spanish debt costs have quickly risen to over 7%.
Markets have seen a little pull back in crude oil futures prices in early trading as Syria civil war news hit the oil market. Though Syria is not a big producer of crude oil it is a connecting point of three major country‘s pipeline Iraq, Jordan and Turkey. Most of its oil gets exported to the European continent.
United Nations General Secretary Kofi Anna has stepped down as the Syrian rebellion is not under control and there seems to be no clear path.
Another positive cue may be formation of tropical storm Ernesto in North Atlantic region creating concern of supply disturbances.
Today market is focused on the main event, the US nonfarm payroll data from world largest oil consuming nation US. The report is expected to show a very slow increase in jobs creation after four consecutive months of declines. However, this moderate growth in job addition will not be sufficient to bring unemployment rate below 8percent. So, we may expect labor sector to remain sluggish which may keep the unemployment rate unchanged at 8.2percent. High unemployment and low job creation is a negative for crude oil.
Other than this PMI numbers from the eurozone are also expected to show a negative outlook. With the ongoing slow down in China Manufacturing numbers released early today, is also expected to weigh on oil prices.
Overall we may expect oil prices to trade under pressure driven global economic concern creating slow down in fuel demand.
There is no support for crude oil, so the only factor that might hold up the price will be geopolitical concerns and tensions. Although Syria is a hot spot, it has been an ongoing situation.
On the other side of the energy market we have natural gas prices which are trading below $2.914/ MMBTU with a huge drop of 0.15 percent as investors continued to take profits after negative sentiment invaded the markets after the ECB disappointment. Also the EIA reported that natural gas storage has increased by 28 BCF, higher than prior week; having negative impact on gas prices. Natural gas consumed for power generation (power burn) declined slightly for the report week that is more than 3 percent. Declining demand may continue to weigh on gas prices today. However formation of tropical storm Ernesto in North Atlantic region creating concern of supply disturbances which may add some pull back in gas prices. The nonfarm report will have little effect here.