With the US growth data showing a weak picture and the debt crisis weighing high on the European market, Crude oil prices were remarkably low on November 23, 2011. The light sweet crude, NY’s main contract for delivery was down by 53 cents and reached at $ 97.48 per barrel. Meanwhile Brent North Sea Crude for January delivery lost 26 cents and stood at $ US 108.77.
The crude markets painted a dismal picture, as a result of the depressed economic situation in United States as well as in Europe, reported Barclays Capital. It stated, "Macro concerns remain in the driving seat and, with a slightly softer fundamental picture, downward pressure.”
On the other hand the US Commerce Department on November 22, 2011, reduced its third quarter estimate of US growth from 2.5 percent to 2.0 percent. It also tried to avoid to talk of crude oil prices since US is the largest consumer of oil in the world. Europe’s woes pertaining to the stagnant debt condition worsened the position of the traders further.
It added, “Key event risk, particularly related to European politics and sovereign debt markets, is set to continue to be the main driver of risk assets in the coming weeks and oil is unlikely to remain unscathed."
The IMF (International Monetary Fund) on November 22, made an announcement regarding the new lending facility that aimed at providing “bystander” countries a protection from any sort of contagion during the financial crisis, thereby sparking off a crude oil rally. This announcement did not clearly mention the names of the benefitting countries, but it seemed apparent enough that it was designed specifically for Italy and Spain, which are under the pressure of massive debts, but the fiscal imbalances are reasonably sustainable over a short span of time.
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