Much of the oil complex staged a rally in late US afternoon trading Monday, as the future of the euro was given a boost on comments by European Council President Herman Von Rompuy.
Von Rompuy said in Moscow that EU leaders would develop a plan for stronger economic integration by the end of 2012, with plans for steps to be taken to be released sometime in June, according to news reports.
NYMEX July crude futures settled 75 cents higher at $83.98/barrel, while ICE July Brent futures settled 42 cents higher at $98.85/b.
Products contracts settled mixed, however, with NYMEX July heating oil falling 10 points on the day at $2.6269/gal while July RBOB futures settled 1.39 cents higher at $2.6707/gal.
"After all the technical damage last week, the market is finding some stability on a stronger euro today," said Phil Flynn of Price Futures Group. The euro was trading higher Monday, reaching a daily high of $1.2510 around 11 a.m. EDT (1500 GMT), and was trading around $1.2492 at the NYMEX settle.
"Crude rallied a bit, and the euro is rebounding with this master plan to save the euro," Flynn said. "All the bad news has been priced in, so we're getting kind of a bounce today. We seem to be stopping the free fall for right now," he added.
Citi Futures Perspectives analyst Tim Evans expects the EU -- per Von Rompuy's comments earlier in day -- will come up with a plan by the end of 2012. "The focus seems to be shifting, at least somewhat, away from weak macroeconomic data, toward possible policy responses," Evans wrote in a note.
Prior to the late rally, the complex was largely down overnight and as the New York trading day progressed.
"The negative tone across markets was set after a report showed China's services PMI fell to the lowest level in a year, according to the National Bureau of Statistics and China Federation of Logistics and Purchasing," Tradition Energy analyst Addison Armstrong said in a morning note.
And despite Monday's gains, the market continues to face strong headwinds.
"Poor economic data from the US and China, plus the sovereign-debt crisis in the eurozone, are causing the US dollar to appreciate and are putting equity and therefore also commodities markets under pressure," wrote Commerzbank analysts in a morning note.
"In the near future there is no end in sight to the downward spiral," the Commerzbank analysts added.
