The EU Crisis Continues to Weigh on Crude Oil

By FX Empire Analyst - Barry Norman
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Nymex oil futures prices have slipped by more than 1.6 percent from last Friday’s closing and trading at $90.44/bbl during the Asian session. Oil prices declined from its nine week high on concern of slowdown of its second largest consumer China. An advisor from People banks’ of China has said that the growth rate will decline to 7.4 percent from 7.6 in the coming quarter.  Once again Greek concerns have hit the market ahead of an international creditors meeting scheduled for tomorrow in Athens which is keeping the shared currency euro under pressure as the European sovereign debt crisis with Greece and Spain taking the centre-stage. News that Valencia will need financial aid, is complicating Spain's efforts to stave off a full-blown sovereign bailout. Further, the troika is going to meet tomorrow on a review discussion regarding whether Greece has done enough austerity to control the spiraling debt worm and may further weaken base oil in today’s session.

Most of the Asian equities have opened in a negative note, which is also having negative impact on oil prices.

From economic calendar the Chicago Fed net activity index is likely show a contraction which may create concern of lower demand from largest oil consuming nation. Also, eurozone consumer confidence is also expected to fall further in the last month may drag oil futures lower.

Other than the above economic factors, news from Iraq says that it have resumed exporting oil to Turkey ,after an explosion shut one of the pipeline which carries more than 3.5 million barrels per day. Overall, the whole pictures are looking bearish for oil prices for the day.

However, any news from prevailing civil war in heart of Middle East may change the oil price direction upward.

Natural gas prices are trading above $3.083/mmbtu with gain of near 0.20 percent in Globex electronic platform. Today we may expect gas prices to continue the positive trend supported by its intrinsic fundamentals. The EIA has projected that consumption of natural gas in the electric power sector will grow by 21 percent in 2012, primarily driven by the increased relative cost advantages of natural gas over coal for power generation.

Air conditioning cooling demands in the US may be 20 percent above normal from July 25 through 29, data from Weather Derivatives in Belton, Missouri show. The dry soil of the Midwest will help make the summer of 2012 one of the three warmest in the US and southern Canada since 1950, according to AccuWeather. As per US Energy department, natural gas storage has increased by 28 BCF in the last week, lower than expectation which may continue to support gas prices. However, demand has been declined by more than 1.5 percent in the last week, highly contributed by power sector. This may limit the gains in prices

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