NewsCrude contracts drop below $73 per barrel with the start of February trading
AnalysisA new month has arrived, while crude oil contracts remain below $73 per barrel due to effects of weak global demand amid volatility in economic performance. The South Korean government stated that oil imports have declined for the third consecutive month.

Oil imports fell in South Korea through January by 20%; where the nation is considered the fourth global energy consumer. Supplier maintained low production capacity amid sluggish consumption and volatility in demand affected by the prevailing turbulence domestically and across the global economy.

Demand levels on oil in the US, remain presently fragile compared to the same period last year. However, the main focus is on the materialization of stronger demand as investors seem to have neglected Friday's data which presented a strong than expected GDP growth from the United States.

The data from the United States this week is very critical, with the infamous labor report queued for release. The start today is to be with manufacturing data and expectations are for the ISM to have remained around the previous month’s level as production consolidates and hinting that demand on oil remains sluggish amid fragile consumption.

Crude declined by 8.2% in January, recording its biggest drop since December 2008. Commodities fell last year due to waning demand on the back of the global recession which erupted from the worst financial crisis since the Great Depression; the S&P GSCI commodity index fell by 7.3% throughout January.

On the other hand, OPEC reduced production rates in January for the first time in five months by 45,000 per barrel daily to around 28.955 million barrels daily. The last time OPEC cut its supply quota was in late 2008 in the wake of the slump in global demand.  

The dollar is trading throughout the Asian session near its highest levels in seven months, therefore weakening crude's appeal. Investors are leaning towards purchasing the dollar as confidence in financial markets retreat, while the dollar’s fundamentals are strengthening opposed to those of the euro which is trading softly versus greenback around 1.3885; lowest levels since June of last year.

In other NYMEX trading as of 03:15 EST; future contracts for heating oil for March delivery rose to record $191.860 per gallon by $0.560; motor gasoline is also trading around $191.400 per gallon after gaining by $0.600; whereas natural gas contracts ascended as well by $2.53 to record $5.261 per 1000 cubic feet. In London, Brent future contracts rose by $0.110 to record $71.57.

Crude opened today at $72.65 per barrel, recording its highest at $73.05 and lowest at $72.45 per barrel, while it currently is trading around $72.80 per barrel.