Oil rises as Cyprus worries ease

[Omaha Steve]

Source: AP-Excite

NEW YORK (AP) - The price of oil reversed sharp early losses and finished higher Monday as nervousness over a bailout plan in Cyprus abated.

Benchmark oil for April delivery rose 29 cents to end at $93.74 a barrel in New York. It had dropped as low as $91.76 earlier in the day.

Traders initially worried about possible fallout from a plan to pay for a bailout for cash-strapped Cyprus by slapping a tax on deposits in the country's banks. Some bank customers withdrew as much of their cash as they could and the fear was the panic could spread to other countries and prompt capital flight from weaker EU economies.

Stock markets in Asia and Europe fell sharply. But as U.S. markets recovered from an early decline, oil started to rise.

FULL story at link.


Read more: http://apnews.excite.com/article/20130318/DA53NB6G2.html

[maxsolomon]

1. I guess that makes sense

Speculators will drive the price up on any excuse they can find.

[elleng]

2. 'as nervousness over a bailout plan in Cyprus abated'

it did? How? Why?

[Demeter]

3. Blowing smoke

Nothing has passed, no one is happy, everyone is out of their minds.

If someone isn't nervous, he isn't paying attention.

[Munificence]

5. I agree with you!

I have been "around" here for a long time but don't post much, I pretty much like talking about economies, bailouts, finances, and guitars! What amazes me about DU is the lack of post like this getting 200 replies but instead if Hugo dies you get folks all fired up. Are most that short sided in seeing that this is a "bid deal" (Cyprus)?

I think it's huge. There are so many financial ramifications that can play out here, loss of confidence in EU banks, government issues like Germany distancing itself from Putin in "trying to build bridges" and such. I mean this Cyprus thing did not just pop up "yesterday" like most would like to think it has, this has all been planned out. I am interested in finding if the politicians and other 1%ers "in the know" moved their funds out beforehand.

And WTF is the POTUS doing n Israel? Bombings coming soon to Syria via the U.S.

Fed will say that QEinfinity will need to be raised to help Europe, so I am sure we will get a new amount added onto QE that will probably be around $120 billion a month vs the $85 billion a month we are printing now (efforts that have only managed to produce the sentiment that "all is well, look at the DOW).

And to think that most folks will call this "theft" in Cyprus when our own gov is doing the same to us by printing $85 billion a month in QE...sure they are taking up to 10% from bank accounts in Cyprus, but we are having the same thing done to us in QE...we are just putting it on a credit card!

JPM (JP Morgan) has more derivative exposure than the worlds GDP and JPM and all things "FED" go through JPM....There is no difference right now in the FED, JPM, and Our Gov, they have merged into a single entity.

Oh, well, guess I will go back to not posting and simply being an observer.

[Psephos]

7. I think you should continue posting. n/t

[Demeter]

10. You'll find like-minded people bunkered down in the Economy Forum

Stock Market Watch and Weekend Economists threads, specifically.

[iamthebandfanman]

4. yeah.. okay...

are we ever going to decide enough is enough when it comes to these earth killing greedy assholes?

[secondvariety]

6. What does Cyprus

have to do with the price of oil?

[Lucky Luciano]

8. Oil is highly correlated with risk assets.

If Cyprus scares people into thinking there could be a bank run, then equities will get weak which could imply an oncoming recession which implies less demand for most products - including oil.

When markets move in a risk on-risk off mode as European headline concerns often do, you see:

In Risk Off:

1) USD gets stronger
2) JPY (Yen) gets stronger
3) Eur(o)/SEK (Swedish)/NOK (Norwegian)/CHF (Swiss) all get weaker (relative to the $)
4) You may see EURCHF (EuroSwiss Cross) approach the cap of 1.20 set by the Swiss Nat'l bank - ie swiss gets strong relatiove to Euro.
5) Oil/NatGas/Copper etc go down
6) Currencies of countries that export a lot of commodities get weaker like AUD (Aussie), CAD (Canadian)
7) Emerging Market stocks underperform as do their currencies - like BRL (Brazil), MXN (Mexico)
8) Of course stock markets go lower across the board.
9) US/German/British/Swedish/Norwegian/Swiss/Canadian bond yields plunge - particularly in the 10-30 year buckets
10) Italian/Spanish Bond Yields spike up.

etc etc while Risk-on is the opposite. Since the beginning of the year, we had gotten away from the risk on/risk off whipsaw and correlation plunged meaning these relationships did not hold as well - their respective moves were more idiosyncratic. Any reemergence of the EuroCrisis will mean correlation will be back as will be the risk on/risk off trades.

[Purplehazed]

9. I guess I missed it

I've never found a good source of information regarding how oil is traded from the well head to the gas pump. I gather that it is a lot more complex than farmer Brown selling eggs at the road side.

There will be upsets in the financial markets. Overall recessions will continue or get worse, perhaps just recoveries will stall. Wouldn't that foretell decreased demand for oil? Shouldn't that decrease the price of oil?

It's common news to hear that "The price of oil increased today on news that blah, blah, blah" but never a satisfactory explanation.

[secondvariety]

11. No offense,

but that sounds like a lot of economic gobbledygoop. A sheep farting in somewhere in the world seems to affect the price of oil.

[Lucky Luciano]

12. Fine, observe the market and tell me you conclude something different. nt

[secondvariety]

13. I didn't say you were wrong,

it just sounds like a horseshit excuse for raising the price of oil. I wish whomever would just be honest and say "We're raising the price of oil for absolutely no good reason and there's nothing you can do about it so suck it."

[Nihil]

14. You're talking to a full-blooded capitalist there ...

... a "greed is good" fanatic who thinks that all of the world's problems
can be left to the "invisible hand" ...

Yes, it is a horseshit excuse but it's the only one that such people can produce.

[Lucky Luciano]

16. So a threat of recession should have no impact on oil?

If the economy looks to be humming along and stock markets go higher and emerging economies like China etc are doing well, you don't think that means there could be more demand for oil? When the opposite is true, you don't think that means the demand for oil could go down (all of this barring middle east supply shocks and other assorted messes).


I am not an invisible hand person. I do have a family to support like everyone else and I work hard to do it. Totally fine with a Bush tax cut expiration, infrastructure projects instead of war, etc.

[quadrature]

15. this story is garbage

if the economy of Cyprus breaks down,
less oil will be consumed by their bubble economy.
price of oil will trend less.

everybody wins