Energy markets are lower as S&P joins Moody’s in warning the U.S. that they will cut U.S. credit ratings from the prized triple-A rating if the U.S. fails to solve its budget deficit issues and not raise the debt ceiling limits. Europe will release stress test results for 90 European banks today which could force some EU banks need to receive financial assistance. Bernanke comments again influenced the commodity market. He essentially stated that QE3 would not utilized unless there were signs of deflation and then only under great scrutiny. Commodities sold off almost as fast as the rally the day before. A U.S. default gets closer as neither side is gaining momentum in negotiation and similar discussion are occurring over in Europe with Greece’s almost certain default. We still have discussion of a second release of global strategic petroleum reserves weighing on this market. Germany and Italy oppose a second release. North Sea crude production should pick up as the Buzzard field will restart in August. Gadhafi still is holding up, but now 30 countries are recognizing Libyan opposition as legitimate. Geopolitical issues remain, but only as a back drop to the current economic issues globally.
The bulls have lost the momentum to take this market beyond $100.00. I am not sure the bears can take this market below $90.00, so crude oil and the energy complex will probably trade in a range bound mode until the next piece of economic news pushes or pulls this market.
