Crude oil prices fall as Greece drives the global economy in turmoil after voting no to the terms of an European Union bailout. After biting the hands that feed it, now it is a wait and see to see if Greece can remain a member of the Eurozone. Greece's Finance Minister Yanis Varoufakis surprisingly quit after the win because he feels it is his duty to help Greece get a deal, and that forces in the EU won't deal with him. "I shall wear the creditors' loathing with pride," he said after his resignation.
Oil prices are also getting pressure from the turmoil in the Chinese stock market. The Chinese government has started to buy stocks to try to support the market but it is not making us feel any better about oil demand. Reuters is reporting that "Chinese stocks rose on Monday, as an unprecedented series of support measures unleashed by Beijing brought some relief to a market whose headlong slide over the past three weeks had raised fears about the stability of the world's second-biggest economy."
In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China's state-backed margin finance company, which in turn would be aided by a direct line of liquidity from the central bank. The CSI 300 index, 300 of the largest listed companies in Shanghai and Shenzhen closed up 2.9%, while the Shanghai Composite Index, SSEC gained 2.4%"
Oil also is getting pressure as the record drop in U.S. oil rig counts came to an end in spectacular fashion. Baker Hughes reported the first jump in oil rigs since December, rising 12 rigs.
Oil prices act like the fundamental rug had been pulled out from under it. Uncertainty in global markets is going to lower demand expectations. Even the fact that the Iranian nuke talks have been extended has been viewed as a negative! Still, if we can hold this area and bounce we might be able to mount a comeback.
On second thought
After Greece became the first developed nation to miss a payment to the International Monetary Fund, it seems that after 24 hours of economic collapse Greece now says it is now ready to accept the bailout conditions it previously rejected. Though it may be too late as the total recklessness and arrogance of Greek Prime Minister Alexis Tsipras has caused damage and pain to the people of Greece that easily could be avoided. Tsipras decided to play poker using his country's people as poker chips and Germany just called his bluff. When Greece begged for more talks, German Chancellor Angela Merkel said there is no point until the July 5 referendum that Tsipras called for and is telling his people to vote against the EU.
In desperation as its economy implodes, it is now saying it will take the deal with the creditors with some so-called minor changes. Germany may consider the latest desperate plea but say they want more clarity of this latest proposal before they give Greece any hope. In the meantime Tsipras has continue to cause pain for his people as his overestimated his and Greece's importance to the Eurozone.
Oil prices also sold off after the American Petroleum Institute reported that crude supply fell 19,000 barrels as opposed to an estimate of 2.5 million barrel draw. Yet, is that really that bearish? Most should have been looking for a rebound in supply after the aftermath of Tropical Storm Bill. The API also reported that distillate supply rose by 263,000 barrels and gasoline supply rose by 334.00 barrels. Plus we saw a draw in the all-important Cushing, Okla. delivery point.
OPEC production also hit a three0year high, led by Iraq that it's production soared to an all-time high. Add that fact to that Iranian nuke talks were pushed back and Greece inspired economic turmoi,l it is amazing that oil is holding up as well as it is.
Ethanol prices soared after the USDA quarterly crop report. Corn prices drove gains after the USDA missed acreage estimates by about 1 million acres. All the grains soared as soybeans and cotton also missed estimates to the bullish side. Wheat on the other hand was bearish but supported by the rest of the complex.