Volatility has returned to the market. With the Iran situation tension slithering down the oil market has focused on the demand side and the health of the economies of US and European nations. This is precisely what caused such a dramatic drop in oil prices in just over a day or so. Comprehensive coverage by Bloomberg Mark Shenk highlights these points:
- This is the first time that WTI oil fell below $100 barrier since February. US employers inducted fewer labor than expected and combine this demand situation with the current highest level of inventories in twenty one years. 160,000 increases in payrolls were expected whereas only 115,000 were achieved. Brent also fell due to dismal manufacturing output. Labor participation rates fell as well as purchasing managers’ figures in EU region. May 6 and the corresponding days are very crucial because of French and Greek elections as well as local elections in Italy and Germany. This would have a major impact on policy for the region from where 12% of total oil demand arises. The situation is volatile as WTI touched $106 on May 1 but just 4 days later fell to around $98.