Energy Prices Tumble

After bouncing from multi-year lows, erasing some losses, oil prices have resumed their plunge lower as the end of the technical rebound draws to a close. The West Texas Intermediate crude oil blend traded below recent trough, trending under an important support level at $49.75. Any move below the next relevant level at $48.08 per barrel could be the motive for prices to slip even further to the downside and resume the prevailing medium-term downtrend. Supply in the oil market continues to grow as a Libyan pipeline comes back online and American producers pump at breakneck speed to meet debt repayments for shale projects. Not helping matters is the move by the Saudis to keep cutting prices in an effort to maintain market share. In any event, the squeeze higher in prices looks to have found its peak as analysts reposition estimates for prolonged weakness.

Although the deal was reached on Friday between the Eurogroup and Greece, terms of the deal have yet to be forthcoming as market participants await more details on the Greek reform proposals. There seems to be broad confusion as to whether the proposals were submitted before the midnight deadline, but conflicting reports show that lawmakers are racing to gain approval from national parliaments to bring the compromise to closure. Firebrand German Finance Minister Wolfgang Schaeuble has the difficult task of convincing German lawmakers that another round of taxpayer funded relief for the Greeks is warranted after years of railing against the spending and tax collection practices of the Greek Government. EURUSD continues to trend within a horizontal range ahead of today’s testimony from U.S. Federal Reserve Chairwoman Janet Yellen. Any hints towards interest rate policy could be the impetus for a breakout from the multi-week consolidation.