Market Overview

Brent Supply Worries Outweigh Economic Issues in Europe


Brent crude oil traded at 112.450 Tuesday morning, recovered from Monday's negative reaction to demand worries. While investors watch China nervously after a report showing yet another quarter of stunted economic growth, unrest in Spain, Greece and now France continues to fuel speculation that demand will decrease in the future.

New unemployment data from the 17 euro zone nations reported sky high percentages, especially among struggling economies like Spain and Greece. This came as no surprise to most; but the data coincided with news of the latest anti-austerity demonstrations breaking out in France, one of Europe's largest economies, and has only contributed to growing demand woes. However, many believe that European economies are on the upswing and are expecting oil prices to close out the year in the near $112.

Although there are several factors indicating limited demand for oil in the future, supply problems have provided enough pressure to override a lack of demand. Concerns about production and distribution seem to take center stage right now, as rumors about Iran's nuclear development program make headlines. As tensions rise, war in the Middle East becomes an unlikely but possible outcome.

CNBC reported that U.S. and EU sanctions to curb the program have taken nearly one billion barrels of Iranian oil from the market each day. As long as these sanctions are in place and war is a possibility, oil prices will be supported and may even see spikes in the coming months.

Posted-In: News Commodities Global Markets


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