Oil reached 11 year’s low

Monday was the day Spain announced their winning party for the elections. Partido Popular (PP) won the referendum but the seats they obtained were 122 from an absolute majority – 176 needed, due to which forming a government will be a difficult task. The Socialists obtained 91 seats, Podemos settled with 69 seats, while Ciudadanos with 40 seats. The most important issue regarding this mix is how Rajoy from PP can put together a government. Although there is chatter about the Ciudadanos backing them up, there still isn’t a majority formed and even in the event that other small parties will join the alliance, reaching the absolute majority will be tough. It is the first time in Spain’s history that a party wins the elections with such a low percentage of the total votes, being left hanging in uncertainty.

Tuesday we see a GBP/USD struggling after the release of UK’s borrowing figures. The trend tried to extend its gains over the 1.49 handle after UK latest data revealed a spike in October’s net borrowing in the public sector. The numbers printed far from expectations, growing up to 13.557 billion pounds. Therefore, GBP’s bid tone refused to gather momentum, the major impaling at 1.4908 before the release.

On the other side of the ocean, the US real GDP (Gross Domestic Product) has increased at 2.0% annual rate in 2015’s third quarter according to latest information (the “third” estimate so far) published by the BEA (Bureau of Economic Analysis). According to BEA’s “second” estimate the real GDP had increased in this year’s quarter with a higher 2.1% annual rate. The second quarter’s real GDP growth was 3.9%. If we dig deeper in the official reports, we can see that the increase in the real GDP for the third quarter is rather the increase coming from PCE (personal consumption expenditures). The non-residential and residential fixed investments, the local and state public spending and also exports were partly counteracted by the negative contribution residing from private inventory investment.

Black gold prices went upwards and registered a nice recovery yesterday, but after the WTI (West Texas Intermediate) barrel reached below the $34.00 handle and the Brent barrel posted fresh 11-year lows. WTI’s future for February went up just over 2% reaching a $36.54 after retracing to settle at $36.40. In the meanwhile, the Brent barrel lingered in the $36.50/barrel area, coming up from the $36.04 decade low on Monday. Although the small recoil yesterday, both US benchmarks are near multi-year lows and also, there is the continuing threat of the global supply glut.