NewsCrude drops below $76 per barrel affected by weak demand
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AnalysisCrude oil contracts fell this morning below $76 levels per barrel, after reports showed continuing weakness in demand levels from the U.S at a higher pace than last year.

The EIA report released yesterday showed that refineries’ production capacity dropped to the lowest since 1989 at %78.4 last week, while fuel consumption rates dropped last month by 1.8% compared to the same period last year.

The EIA reported a drop in crude stockpiles by 0.4 million barrels, compared to the previous buildup of 3.7 million barrels but lower than expectations of 2.2 million barrels. Crude inventories are now at 330.6 million barrel and above the average range for this time of year. Meanwhile, motor gasoline gained by 3.9 million barrels last week and still the higher the average range for this time of year, while distillate fuel inventories that include heating oil receded by 3.3 million barrels and still above the average.

Crude contracts yesterday plummeted to $75.66 per barrel, the lowest since December 23, after U.S stock markets plunged due to President Barrack Obama's new proposal, asked congress to pass regulations that rein on banks’ risk taking and limit their maneuvering grounds in investing other than that for clients; therefore triggering fear over sinking liquidity pumped into markets and invested in commodities, after several institutions speculation contributed to oil’s heavy movement in the past two years, especially when oil prices reach their historical record above $147 per barrel!

Crude contracts dropped so far this week by 2.5% affected by the slump in equity markets which pressured confidence levels; also, due to the dollar's appreciation that reduced demand on commodities.

Dear reader, prevailing economic conditions are standing against further gains for crude, from weak demand levels amid high inventories, to fragile and volatile stock market, and a stronger dollar. Meanwhile, OPEC seemingly is to maintain its production quota unchanged and that is further agitating the market.

The S&P GSCI index closed evening yesterday at 508.39, down by 0.41 points; whereas the S&P GSCI energy index gained to close at 254.83 rising by 0.34 points.

As for NYMEX trading; heating contracts for February delivery declined to $1.98 per gallon by 0.47 cents; while motor gasoline contracts traded around $1.98 per gallon after gaining by 0.15 cents; whereas natural gas contracts inclined by 4.3 cents to close at $5.67 per 1000 cubic feet. Meanwhile, Brent dropped in London by 11 cents to $74.47.

Today, crude oil contracts for March delivery opened at $75.82 per barrel, recording its highest at $76.36 and lowest at $75.60 per barrel, while currently trading around $76.12 per barrel.