Morning Petrospective – September 30, 2011
he oil complex was mixed on Thursday, with crude oil prices finishing higher while refined products closed lower. Within that, heating oil prices were down fractionally while gasoline prices dropped more than three cents. The biggest focus of the market was on Germany, where the German parliament approved a proposal to expand the euro-zone fund to finance Greece’s bailout. That had been the ‘big event’ that investors had been waiting for and it was seen as being positive for markets.
Of course, the problem will not just go away after this. There are seemingly endless rounds of this interminable Greek bailout. We must confess to a certain bewilderment. No sooner does Germany or Brussels or the IMF approve the latest funding needs for Greece than lo and behold – Greece needs another round of help. We actually have believed that this Greek debt situation was resolved two or three times already. And, yet, every other Monday we seem to return to a fresh crisis.
Commentators seem to periodically acknowledge the ongoing nature of the problem, obscurely referring to “the next tranche” needing to be refinanced in a week or two. And, then, we hear – with relief – that a pan-European meltdown has been miraculously avoided … until the following week or two later, when we are back on the hook for more. Where does this end? Does it end? We do not seem to be any closer to ending it now than we were weeks ago. How many times can we avoid financial meltdown? This is confusing and unpleasant.
Apparently, there was a “second bailout” for Greece of $109 billion on July 21st. There is some ongoing discussion about refinancing that loan, which consists of Greek government bonds (GGB’s) on which interest rates fluctuate wildly. On offer to investors are four different options involving exchanges for longer-dated bonds – which involve “haircuts” of 21% - which some say are not actually as bad as they seem. Germany’s parliament approved the terms of this second bailout package on Thursday, accepting changes to the European Financial Stability Facility (EFSF), which can now try to fix the sovereign debt crisis in Europe. This has nothing, yet, to do with refinancing options or haircuts, although those could increase the amount the EFSF will have to fight the crisis later ... . It goes on.
We get lost here as easily as anyone … especially since we are writing about OIL!
In any event, it is not a problem for the rest of this week. American investors were cheered by local news. Weekly US unemployment claims fell by a very robust 37,000 to 391,000 for the week ended September 24th. It was the lowest figure applying for first-time claims since April. Economists had expected 420,000 claims for the latest week.
The US economy reportedly grew at a rate of 1.3% in the second quarter, which is an improvement over estimates a month ago. The previous figure had estimated a growth rate of 1%. Most economists expected this revision to come in at 1.2%. GDP grew by 0.4% in the first quarter of 2011. The third quarter ends on Friday this week.
In the increasingly surreal oil markets, factors we never even considered in the past can now give us huge gains or losses. We did not mind learning about quantitative easing, but Greek debt undoes us.
FMX Newswire
FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.
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