Will oil prices correct after central banks announce reflation measures?
*Reuters, by Christopher Johnson, September 26, 2012
”Greece’s transport system ground to a halt, shops pulled down their shutters and hospitals worked on emergency staff on Wednesday as the country’s two biggest unions protested against a new round of belt-tightening.
The strike followed violent protests in Spain, reigniting worries that the euro zone debt crisis is deepening despite efforts by central banks to reflate their economies.
A stronger dollar and a weaker euro also depressed oil after the Bank of Spain said Spain’s gross domestic product fell at a ‘significant rate’ in the third quarter.
North Sea Brent crude oil futures fell $1.04 to a low of $109.41 before recovering to trade around $109.60 by 0850 GMT. U.S. light crude oil futures also fell sharply, dropping to an intra-day low of $90.33, down $1.04.
Crude futures surrendered gains made earlier this month when both contracts reached four-month highs on a commodity-wide rally fed by stimulus measures by U.S. and EU central banks.
‘It is ‘Risk Off’ today,’ said Olivier Jakob, energy analyst at Petromatrix in Zug, Switzerland. ‘The Greek strike and Spanish demonstrations are getting a lot of coverage.’
The euro fell to a two-week low against the dollar on Wednesday. Oil tends to move inversely to the dollar as many commodities are priced in the U.S. currency.”
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