Greece’s financial condition worsened after the announcement by the European Union with the country moving fast to close down its banking system for six days to buy it more time to resolve the crisis.
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“The main implication is for euro/dollar and I think it will put additional pressure on the euro“.
Aluminium closed down 1.5 per cent to $US1,685 a tonne on oversupply concerns.
“This week is a huge week”. “The oil market is a little twitchy,”. “It could potentially move the market out of the current range”.
Meanwhile, the nuclear talks between global powers and Iran were originally supposed to have been concluded by the end of June, but the deadline was extended until July 7 to allow time for negotiators to finalize the deal. Libyan production is so close to the bottom that it can’t get much worse, and with the exception of Venezuela, no other production appears to be under threat of disruption.
“After the initial knee-jerk reaction, the majority opinion is that there is still a possibility of some sort of a deal that keeps Greece in the euro zone”, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. The two sides are expected to come to an agreement over Iran’s nuclear program, the deadline for which is Tuesday. Iran is reportedly pushing for a complete lifting of the United Nation’s arms embargo. “The only thing fast is the floating storage, but again, that’s going to have to wait until restrictions are lifted”. “All of that in my view creates a very negative backdrop for the oil market”. A group of 21 brokerages led by Citic Securities Co. will invest at least 120 billion yuan ($19.3 billion) in a stock-market fund, the Securities Association of China said the next day. The argument is whether the Chinese government is anxious.
Markets were under pressure after Greece voted to reject austerity measures proposed by its global creditors. Signs that U.S. shale oil production will not decline will definitely concentrate the minds and bladders of oil traders. That could be a game changer by deepening the oversupply of oil and sending prices down even further. But it was better news for motorists, signalling a potential easing in petrol prices, with the decline in the Australian dollar cancelling out only some of the impact, economists said.
Both developments could set up a clash with Saudi Arabia, which is scrambling to raise its own export numbers and has opposed the return of production limits on individual OPEC members.
“We hear an Iran nuclear deal may be about to be announced, and that is bearish if it means early sanctions relief and more Iranian oil sooner rather than later”, said Olivier Jacob, energy markets analyst at Swiss consultancy Petromatrix. As of last week, longs outnumbered shorts by a wide margin.
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In Japanese trade the euro was at $1.1054 and 135.50 yen, clawing back some of the losses suffered in New York electronic trade Sunday, when it fell to $1.0963 and 134.91 yen.
