Crude Oil Increases as the Euro Climbs From a Four Year Low

Crude oil rose in New York after the euro rebounded from a four year low against the dollar on speculation the European Central Bank will announce further steps to halt the region’s debt crisis. Oil rebounded as the common currency gained after Axel Weber, an ECB Governing Council member, said the euro region must “urgently” tighten its fiscal rules. Prices dropped earlier today after Germany’s prohibition on short selling sparked concern that regulation will increase. A government report showed that U.S. oil supplies climbed for a 16th week.

“Oil is reacting to the strong rally in the euro,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “There’s a fear that there will be further government intervention in the markets.” Crude oil for June delivery rose 49 cents, or 0.7 percent, to $69.90 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $67.90, the lowest intraday price since Sept. 30.

Brent crude oil for July settlement declined 88 cents, or 1.2 percent, to $73.55 a barrel on the London based ICE Futures Europe exchange. The contract reached $72.72, the lowest level since Feb. 16. German Chancellor Angela Merkel laid out proposals to gain control over “destructive” financial markets after she imposed a unilateral ban on naked short selling that sent stocks and the euro sliding.

Short sellers borrow assets and sell them, betting the price will fall and they’ll be able to buy them later, return them to the lender and pocket the difference. In naked short selling, traders never borrow the assets so betting is unlimited.....Read the entire article.


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