As if investors hadn’t got enough to worry about with elevated geopolitical tensions, the French Presidential Election and the first quarter earnings season all adding to general uncertainty, yesterday saw crude oil prices plunge following the release of US inventory data.
The Energy Information Administration (EIA) released its latest update for the week ending 14th April. This showed a significant build in gasoline stockpiles, confounding expectations of a large drawdown. The news confirmed Tuesday’s report from the American Petroleum Institute (API). Oil traders were initially slow to react to the news. However, what began as a modest pull-back soon turned into a rout as speculative longs were forced to cover. The sell-off put additional downside pressure on US stock indices which were already struggling to make gains following disappointing earnings from IBM.
European stock indices are weaker again this morning, and all the indications suggest that investors are in no hurry to buy dips ahead of the first round of the French Presidential Election this Sunday. As far as the polls are concerned there’s nothing to put between the four main candidates. It also appears that up to a third of the electorate remain undecided. This means that Europe’s nightmare outcome of a run-off between Le Pen and Melenchon the two anti-establishment, anti-European candidates, remains a possibility.
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