Oil extends sell-off as euro sinks on Greece
A worker packs an ingot of 99.99 percent pure silver, which weighs 30 kilos (66 lbs), at the Krastsvetmet nonferrous metals plant in Russia's Siberian city of Krasnoyarsk, March 28, 2011.
Credit: Reuters/Ilya Naymushin
NEW YORK |
NEW YORK (Reuters) - Oil sold off for a fifth day on Friday, following a 10 percent crash in the previous session, while the euro sank again after German magazine Der Spiegel reported Greece has considered exiting the euro zone.
U.S. stocks recovered from a four-day slide, however, after data showed U.S. employers added more jobs than expected in April, reducing concerns about the economic recovery.
U.S. Treasury prices erased some sharp early losses and turned positive as worries about the future of the euro zone revived their safe-haven appeal.
In an extremely volatile session, oil prices earlier rose more than 2.0 percent on optimism about demand brought on by the U.S. jobs data, but turned negative later as the euro fell and the U.S. dollar rose, making the commodity more expensive for non-U.S. investors.
U.S. crude oil futures closed 2.6 percent lower at $97.18 a barrel. Prices fell $16.75 in the week, their biggest weekly drop since the contract began trading in 1983.
Brent crude futures closed at $109.13 a barrel, down 1.51 percent for the day and 13.3 percent for the week, also the largest weekly loss for the contract.
Selling pressure on oil and other commodities came on several fronts this week, as investors weighed the implications of the death of Osama bin Laden in the Middle East and concerns about the economic slowdown of China, the world's largest consumer of raw materials.
MORE EURO ZONE JITTERS
The euro lost 1.2 percent to $1.435 after Der Spiegel reported on its website that a crisis meeting of euro zone finance ministers and the European Commission would be held on Friday evening to discuss Greece's situation.
Greece denied it was considering to leave the bloc, but official sources told Reuters a small group of European finance ministers was indeed meeting on Friday to discuss the euro zone debt crisis.
"Those Greece headlines definitely had an impact on the euro," said Geoffrey Yu, senior currency strategist at UBS in Stamford, Connecticut.
"Greece leaving the euro zone could cause a cascade of problems, especially for the banking sector and particularly if the European Union allow Greece to unilaterally default on its loans. That would need to happen if Greece wants to leave the euro zone," he added.
U.S. JOBS DATA RELIEF
Key U.S. stock indexes initially jumped more than 1.0 percent after the U.S. Labor Department reported 244,000 jobs were added in April, the most in 11 months and far more than the 186,000 expected by economists.
Resurgent concerns about the euro zone crisis erased some of those gains, but stocks still managed to close in the black.
The Dow Jones industrial average .DJI closed higher 54.57 points, or 0.43 percent, at 12,638.74, while the Standard & Poor's 500 Index .SPX rose 5.10 points, or 0.38 percent, to 1,340.20. The Nasdaq Composite Index .IXIC gained 12.84 points, or 0.46 percent, to 2,827.56.
The MSCI All-Country World Index .MIWD00000PUS was little changed as emerging market stocks .MSCIEF slid 0.1 percent.
Europe's FTSEurofirst 300 .FTEU3 index of top shares ended 1.2 percent higher.
U.S. Treasury prices turned positive as the reports on Greece prompted investors to cover bets that bonds would weaken into next week.
The benchmark 10-year U.S. Treasury note was up 2/32 in price, with its yield at 3.1459 percent.
"It's been pretty aggressive buying," since the headlines broke, said Jason Rogan, director of U.S. Treasury trading at Guggenheim Capital Markets in New York. "A great deal of shorts entered the market after nonfarm payroll and they got caught offside."
(Additional reporting by Steven C. Johnson, Karen Brettell and Matthew Robinson)
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“Russian metal companies are deeply in debt at the Russian Central Bank and must auction their shares in a market that can and will cheat you out of your holdings — unless you are big enough to collect at their objection. Only China is large enough to collect on the back in Russia.
Metals commodity price values are calculated to $80 per barrel oil in these present offerings. Many experts believe this price will set off an even harsher slowdown than the one the world witnessed in 2008-2009 and to expect the market to bear no more than around $50 per barrel. Any decline in oil prices will be bad news for Russian energy and mineral companies, and for new Chinese investors in Russia. Hong Kong is taking a big fat gamble at the beginning of a predictably grim year for Russian energy and metals stocks.
“The unusually stark caveat emptor statement in the prospectus, placed there at the insistence of the Hong Kong exchange, will significantly raise the risk factor for most investors,” Chris Weafer, chief analyst at UralSib, wrote in a note to investors [Moscow News, January18, 2010].
Russia’s Central bank is proving the absolute course of globalization as a failed experiment of science, by desperately needing to unload its mountain of debt through these risky offerings, being caught between two drivers. 1.)They are driven to decrease the debt, and
2.) they are driven by the need to expand forever, in order to stay afloat.” ~ AL Lamar
We need to fund the SEC 10 times what they get now so they have the resources to figure out and stop BS like this BEFORE not AFTER it happens. Easy deficit neutral or better yet positive way to fund; Increase or add a small tax on EVERY financial, derivative, stock, commodity or other ‘fast’ (as in less then years) moving investment transaction.
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