After yesterday’s bullish movement of crude oil prices and Natural gas spot prices, there seems to be a cool down in crude oil prices, as they show some moderate price drop. Some consider it a result of traders and inventors’ concern regarding Europe’s economy and whether or not there will be another country after Greece and Ireland that the European Union will need to bailout.
This analysis corresponds with the following bits of information:
According to the Economist, there is reason for concern, as the CDSs (credit default swaps) spread is on the rise for many European countries:
Greece and Ireland lead the charge with 9.9% and 5% spreads, respectively. Remember that CDS is a derivative that acts like insurance for investors who believe the borrower of the debt won’t be able to pay back its debt. Therefore, if a country isn’t capable of paying its treasury bonds, it will be claimed default and the buyers of CDS will get the amount of the debt from the issuer of this derivative.
Portugal and Spain are also on the rise with a current spread of (as of 22.11.2010) 4.1% and 2.7%, respectively. This means investors show a rise in lack of confidence in these countries not capable of paying back their debt.
Today, the Euro continues to fall compare to the USD as the EURO/USD is currently traded at 1.3026 a 0.75% fall.
And finally, there is an ongoing rise in the yields of 10 year treasury government bonds of many European countries. As a yield rise, it shows lack of confidence of investors in retrieving their investment back. Currently the leaders in the EU are Greece with 11.77% yield (rose by 6.59% this year); while Ireland is at 9.2% (4.35% rise). There is a rise in other countries such as Portugal with 6.99 %( 3.2% increase), and Spain 5.18% (1.42% increase). As a comparison, France has a 3.14% yield and Belgium has a 3.68%.
All these bit of information show that there is merit for concern about the EU countries, and this could explain the fall in Natural gas prices and Crude oil prices. The reason is it there will be another bailout; it could affect the consumption of energy commodities by EU countries.
Here is an update on the prices of main energy and precious metals commodities for November 30th:
The crude oil price of short term futures (Nymex) – delivery for January 2011, as of 16.39PM GMT, on the New York Mercantile Exchange, is currently traded at 85.13 USD per barrel, which represents a 0.6 decrease or a 0.7 % fall compare to last business day.
The Dated Brent spot crude oil reached 86.17 USD per barrel – a 0.69 USD per barrel drop as of 16.49PM GMT.
The WTI spot price is trading as of 14.11PM GMT at 84.95 USD per barrel, a drop of 0.91% compare to the previous business day’s rate.
Natural Gas future prices are still falling, after yesterday’s over 4% drop. Natural Gas prices (the Nymex Henry Hub Future) is currently traded as of 16.39 PM GMT, at 4.17 $ MMBTU (one million BTU), a 1.02% decrease.
Gold prices are still currently on the rise after yesterday’s moderate rise. In particular, gold short term January delivery future (Gold 100 oz.) is currently traded at 1,385.4 USD /t. oz., a 1.31% rise or 17.9 USD /t. oz. at 16.31 PM GMT.
Silver prices, much like Gold prices, are also on the rise as they are currently traded at 27.86 $/t oz. a 2.45% increase or 0.667 $/t oz. at 16.31 PM GMT.