The disruptions and uncertainty throughout North Africa remains rife and European markets are in the red once again. Already this morning we’ve seen oil spike further with Brent almost hitting $120 a barrel. The FTSE 100 (UKX) has given up over 3 percent after hitting its high at 6100 on Monday and that’s on only three trading sessions so the move to the downside has been sharp and bearish. Now that the index is below its upward trend line it could be driven even lower towards 5800, so in the near term traders will have their eyes on important levels such as 5920/40 to the upside and 5850 to the downside.
Without any swift resolution to the Libyan situation uncertainty is ravaging global indices and speculators are piling into oil driving it higher. Investment bank Nomura even called for oil to hit over $200 a barrel if production in Libya and Algeria completely halted. The forty plus years of Gaddafi rule has finally boiled over and doesn’t look like its going to stop. With the Colonel not wanting to give up power the security situation could really deteriorate and go on for weeks. The ultimate fear that’s being built into the price of oil is the prospect of a Saddam style destruction of the oil wells. Even if Gaddafi’s rule does come to an end soon the other unknowns are who’s going to take his place? Whoever does take the seat of power in Libya it isn’t clear either that a return to full oil production will be any time soon.
So the FTSE has been see-sawing around already this morning having dipped below 5800 and almost hitting 5850 but has just seemed to find a bit of support bouncing back towards 5900. It’s been difficult to focus on the corporate earnings this week but today has seen our part nationalised bank Royal Bank Of Scotland (LON:RBS) announcing that they are both back in profit and back with a much better profit that expected. This is great news for British tax payers who are hoping to see a healthy return on their investment by the time that their stakes in the bank are sold sometime after September. The share price is lower today hardly surprisingly but so far this year it has been a superb performer rallying over 40% so…
