NYMEX futures rose on Thursday, continuing the rebound started on Monday as risk appetite revived following steep drops last week.
 
The absence of more QE3 in last week’s Fed statement sent markets reeling, but they (along with oil prices) recovered over the weekend on hopes that the IMF meeting in Washington would produce some sort of solution to the eurozone debt crisis. For the moment, fundamentals are taking a back seat to apparent feelings of hope and fear, as investors look to the European continent. They are all too aware that an intensification of the crisis could spill over into the rest of the global economy, and with the outlook for all economies looking less than rosy, the situation looks rather bleak.
 
If demand continues to weaken in both developed and emerging markets, then oil could drop further, although for now US crude seems to have stabilised above a support level of $79 per barrel. Risk appetite could return if Europe gets its act together, but slowing growth in China (where talk of a ‘hard landing’ is becoming commonplace) and a weak US economy suggest that oil prices will be subdued for some time yet.