Crude oil futures surged by more than a dollar ahead of the FOMC minutes as the US dollar slipped from the two year lows and good buying emerged in the commodity. The commodity started in a rather mixed fashion but garnered strength in the London trades and zoomed past $85 per barrel levels after Spanish Prime Minister Mariano Rajoy announced 65 billion euros in new austerity measures to meet new budget-deficit targets.
However, the broad sentiments remain stressed ahead of the keenly awaited minutes from the US FOMC minutes. Most of the participants expect a mild bias towards introducing the quantitative easing in case if the economy deteriorates further. This could see some surprise upside moves emerging in risky assets as the conviction that more quantitative easing means more gains for the broad markets shields the underlying weakness in the economy.
Further today, the OECD stated that Europe has paid a high price for uncertainty and letting problems linger while the ECB noted that foreign investments in EMU government bonds fell moderately and debt crisis hasn't undermined the status of the Euro.
The US dollar stayed supported yesterday, pulling commodities lower, as Euro-zone uncertainty remained troubling to investors despite the region's financial officials reaching some agreements at a two-day meeting that ended Tuesday. The policymakers approved a €100 billion bailout for ailing Spanish banks.
WTI Crude tracked thick gains in the European markets and currently quotes at $85.24, up $1.33 per barrel on the day. MCX Crude oil futures for July are quoting at Rs 4740, down Rs 13 per barrel on the day. Prices are on a recovery trail after testing lows under Rs 4700 levels.
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