Crude oil prices get hit hard after Greece fails to reach a deal with creditors and the country called for a referendum. It seems that Greek Prime minister Alexi Tsipras did not have the courage to make a deal and instead opted for turmoil. Greece, in the aftermath of the decision, shut its banks and imposed capital controls in hopes that it might starve off an epic economic collapse.
This comes after what normally would be supportive news after China cuts interest rates and after we saw another record drop in U.S. oil rig counts, and not to mention the fact that an Iranian oil deal does not look like it is going to get done by the deadline.
The U.S. oil-rig count fell by three to 628 in the latest week, according to Baker Hughes Inc., marking the 29th straight week of declines raising concerns about U.S. output and whether or not the drop in counts might stop.
China's central bank cut lending rates for the fourth time since November to an all-time low and also lowered the reserve requirement, which is the amount of capital that some banks must hold as reserves. Usually that type of action boosts energy and it may be one reason why we are not tanking.
Forget about the Iran deal getting done on time. Reuter's news reports that "Iran is backtracking from an interim nuclear agreement with world powers three months ago, Western officials suggested on Sunday, as U.S. and Iranian officials said talks on a final accord would likely run past a June 30 deadline." Securing an historic agreement would end a more than 12-year nuclear standoff between Iran and the West and open the door to suspending sanctions that have crippled Tehran's economy. It could also help ease the diplomatic isolation for an Iran that has become increasingly assertive across the region.
Our call for $65 by the Fourth of July always had one caveat and that was that Greece will not default. All the other numbers would have pointed us towards that target. Now the uncertainty means that we will not hit that target on time which really is a Greek Tragedy.