There has been a strong bounce back in the crude oil futures in the Asian trades today as the markets were enthused on reports that EU finance ministers and central bankers agreed late Sunday on a new loan program that could top 750 billion euros ($970.6 billion), designed to keep the Greek debt crisis from spreading to other vulnerable European countries. The International Monetary Fund could contribute an additional 250 billion euros while the US Federal Reserve is going to reopen a program set up during the financial crisis, to make sure foreign banks have the dollars they need. These upbeat announcements boosted risk appetite as Euro shot up well above 1.2900 against the Euro. Crude oil is trading with massive gains after prices ended near $75 on Friday.
The US economy added a net 290,000 jobs, the biggest monthly total in four years on Friday, even as the unemployment rate rose from 9.7 percent to 9.9 percent. Crude oil tumbled under $80 per barrel last week; following the equities lower and the strength in the US dollar on concern Europe's debt crisis will slow the global economic recovery. Futures dropped to the lowest level in 12 weeks as equities fell amid speculation Greece's financial distress will spread to other countries. Crude oil for June delivery fell $US2, or 2.6 per cent, to settle at $US75.11 a barrel on the New York Mercantile Exchange, the lowest price since Feb. 12. The commodity was also hurt by a freakish movement in the Dow Jones Industrial Average on 6th of May, when the index lost 998.5 points, or 9.2 per cent, in intraday trading, the biggest decrease since 1987.
Stocks warmed up in Asia. The regional benchmarks climbed on hopes that the EU-IMF measures would contain global fallout from Greece's debt problems and protect the Euro. Japan's Nikkei 225 stock average rose 1.45 percent and Hong Kong's Hang Seng index jumped 1.5 percent while Indian, Taiwanese and South Korean markets logged gains in excess of 1%.
Record supplies of oil at Cushing, Oklahoma, the delivery point for New York-traded futures, jumped 1.68 million barrels, or 4.9 per cent, to 36.2 million, as per the Energy Department, the largest amount in data going back to 2004. Overall US stockpiles gained 2.76 million barrels, or 0.8 per cent, to 360.6 million barrels, the highest level since June. The figure is 5.4 per cent above the average over the past five years. US gasoline supplies also gained 1.26 million barrels, or 0.6 per cent, to 224.9 million in the week ended April 30. That's 7.6 per cent above the five-year average as the peak driving season approaches. Gasoline inventories were 6.6 per cent above the average the week before.
However, the commodity shot up today, following the Euro higher. The commodity was seen quoting at $77.13 per barrel in the electronic trades, up $2.02 per barrel after hitting a high of $77.20 per barrel. MCX Crude oil hit a high of Rs 3588 and currently trades at Rs 3483 per barrel, up Rs 38 or more than 1%. The counter may eye levels of Rs 3491-95 and rise from thereon would see markets encountering heavy pressure around Rs 3500 mark.
