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Rise in crude on EU promise doesn't change picture: O'Neill
30 Jun 2012, 03:32 PM  Watch Video
Bill O'Neill, founder, Logic Advisers offers his perspectives on CNBC-TV18 as oil surged on Friday in heavy trading to the fourth biggest daily gain on record, on a deal by European leaders to shore up euro zone banks triggered frantic short-covering by funds that had been riding crude's price collapse over the last quarter.

Brent crude oil futures rose more than USD 6 a barrel to near USD 98 while US crude jumped by more than USD 7 to settle just below USD 85 a barrel - the fourth largest daily gain in dollar terms since the contracts were launched.

Below is an edited transcript of the analysis. Also watch the accompanying view.

Q: What do you make of the increase in crude prices today?

A: This is one of those knee-jerk days when everybody dives into the pool at the same time. Also remember there are a lot of short positions that some of market-traders are overcommitted to. So when the European news came out, it was definitely a surprise.

In our closing comment for Logic Advisers, we wrote that even some minor good news would probably be a boost to the euro and the equity markets, and anticipation of some scope of an agreement. Thats what happened today.

Now does that totally change the picture? No, it doesn't, it's an improvement, a step in the right direction, but we still have to be very careful. We have an unemployment report next week, who knows whats thats going to show.

The previous employment data we have seen has not been good. What will happen over the weekend? Will some European leaders make some comment that will roil the markets on Monday? So there is much in the air before we can say any kind of trend has suddenly reemerged for commodities.

Q: There is a lot that could potentially push prices down further. The US sanctions against Iran, the European sanctions against Iran kick-off next week and supply constraints in Norway because of those strikes and Iraq pressuring the OPEC to cut production. Do you think that will
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