As expected, Greece has defaulted on her payments to the IMF. This much anticipated move now sets up the next deadline: a Greek referendum set for Sunday to determine the troubled European nation’s next move. The default went over with little fanfare, because the event was already priced in to the equity and currency markets for the most part.
Demand side price discovery for energy products showed little reaction as well. Any movement in the energies seems to be to the downside today as the supply side of the equation is back in the driver seat for the moment. The EIA released data today showing crude production for the month of April had risen to levels not seen in over 40 years. While this data is somewhat latent, it does show that the price war for crude has not had the desired effect on the US production numbers.
Yesterdays API data showed unexpected builds in WTI stocks as well. Further confirmation of this reversal from the last five or six inventory reports could come today from the weekly EIA data. Should we see builds in stocks become a more lasting trend again, coupled with some fears about European debt stability having an effect on demand, then we could finally be seeing a fundamental rationale for crude oil to break out to the downside of its now months old 5 to 6 dollars range. Currently the August WTI contract is trading at 58.65. The price would need to trade below 57 to have any real momentum building technical bias creep into the price discovery.
Natural gas is starting to show signs of life with a rally yesterday back into the 2.80's. Tomorrows inventory data should be a big factor in whether or not the beleaguered commodity can make a much anticipated rally back above $3 or not.
Preliminary jobs data is due out today because of the shortened holiday week and could give some indications of what type of a headline report we can expect tomorrow, though any reliable correlation is tentative at best. A solid jobs number should serve to shake off some of the rust of this Greek debt crisis that has traders a bit wary.