In electronic trading this morning WTI crude is up more than 3.3% at $80.38 and Brent crude is up more than 2.8% at $94.04. The rise is certainly due to the plan announced at the European Union summit meeting which would create a Eurozone banking supervisory committee and allow direct bailout of the region’s failing banks.
One has to wonder what oil traders are smoking. The weaknesses of the Eurozone plan, which we outlined earlier today, almost certainly doom the plan to failure. The only question is how long that failure will take to materialize.
There is little dispute that the chief reason for falling crude prices is the slowdown in the global economy which has led to lower demand for the black stuff. Oil bulls are grasping at another straw, wanting desperately to believe that the Europeans have resolved their banking crisis. They’ve just been fooled again.