Crude Selling Stalls as EU Backs Greek Deficit-Reduction Scheme Crude Oil (WTI) $72.22 +$1.03 +1.45% Prices are re-testing resistance-turned-support at the top of a previously broken falling channel established from January’s swing high. The correlation between crude and the MSCI World Stock Index now stands at 0.93, suggesting risk sentiment remains the primary driver of price action. Greek and Spanish credit default swaps declined in early European trade, showing investors were (initially) reassured by comments from EU officials following a weekend summit of G7 finance ministers endorsing Greece’s deficit-reduction plan. This has boosted shares across European exchanges and helped to trim losses on US stock index futures, which had dipped as much as 0.4% into the red in Asian hours. The economic calendar is largely uneventful, leaving the southern European sovereign credit issue as the primary item of concern in the near term. On balance, it seems that EU policymakers offered little more than jaw-boning for the time being, with questions about the feasibility of any plan to reduce the Greek deficit without external involvement likely to come into question once again. Further, even if the market takes Greece at its word, risky assets face a myriad of stronger headwinds, the most important of which is surely fading policy stimulus amid lacking signs of self-sustainable recovery. This is likely to make any upswing in risky appetite a correction rather than a meaningful shift from the down trend established over the past four weeks, which bodes ill for crude prices overall.

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