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After the S&P downgrade of the U.S. credit rating, the market has been circulating that S&P has already prepared a list of countries unlikely to avoid a rating downgrade, with France having a high probability of becoming the next country to lose its AAA credit rating. This is because in the two years after the 2008 financial storm, the ratio of France's fiscal deficit and public debt scale to its GDP was much higher than the EU's prescribed standards of 3% and 6%, which is a fatal flaw for France losing its AAA credit rating. French President Sarkozy convened an emergency high-level meeting, announcing that on the 24th of this month, a formal plan to cut public financial deficits will be introduced. These adverse market factors have caused the recently stabilized European and American stock markets to plummet again, suffering heavy losses.
With the U.S. government report showing a reduction in crude oil inventories last week plus a sharp drop in the stock market, international crude oil finally broke free from its declining trend and began to rebound. According to data: The price of light sweet crude oil futures for September delivery on the New York Mercantile Exchange (NYMEX) rose by $3.59, closing at $82.89 per barrel, marking the highest single-day gain since May 9. The price of North Sea Brent crude oil futures for September delivery on the London ICE Futures Europe exchange increased by $4.11, closing at $106.68 per barrel, up 4%. The futures account opening process shows that, calculated by closing price, the difference between the prices of North Sea Brent crude oil futures and NYMEX light sweet crude oil futures reached a record high of $23.79 per barrel.
According to the inventory report published today by the Energy Information Administration (EIA) under the U.S. Department of Energy, U.S. crude oil inventories unexpectedly fell by 5.2 million barrels in the week ending August 5. A Platts market research company survey showed that analysts had expected an increase of 1.8 million barrels in U.S. crude oil inventories for that week. The report also revealed that U.S. gasoline inventories fell by 1.6 million barrels in the week ending August 5, while analysts expected a decrease of 1.2 million barrels; distillate inventories fell by 0.7 million barrels, whereas analysts expected an increase of 1.2 million barrels.
In general, the current rating storm has become a nightmare for the market. With the escalating European debt crisis, market confidence has become extremely fragile, and there is a possibility that France may lose its AAA rating. This could put the global economy at risk of a double-dip recession, which might be the main obstacle to the recovery of crude oil prices.
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