|News||Crude contracts drop after confidence levels plummet in financial markets|
|Analysis||Crude contracts fell throughout the Asian session below $74 per barrel, waiting for the US jobs report, affected by the US dollar's gain against a basket of foreign currencies due to the fall in confidence levels in financials markets as investors grew skeptic over the pace of the global economic recovery.
The euro versus the dollar yesterday plunged to its lowest levels since last May, after statements by Mr. Trichet in the press conference following the ECB’s rate decision; renewing fears regarding the growing deficit problems especially in Greece which owns the widest deficit in the EU. However, the situation worsened with growing expectations for downgrade to credit ratings in Spain, Portugal and Hungary increasing the EU and the ECB’s tough position.
Meanwhile, on our economic agenda today we await the release of the US unemployment rate for January, where expectations show rates remained intact at 10.0% the highest in almost 26 years. On the other hand, the attention is set on the nonfarm payrolls, where the U.S economy is expected to have added 15,000 jobs; compared to the last month's 85 thousand layoffs. These expectations reflect the improvement witnessed in the U.S jobs market and thereby supporting ease the pessimism prevailing across markets.
The S&P GSCI index closed yesterday at 485.86, after dropping by 18.26 points; whereas the RJ/CRB commodity index followed to record a plunge by 6.91 points to close at 263.67.
On the other hand, NYMEX trading as of 03:30 EST witnessed a drop in heating contracts to record $190.80 per gallon by $2.720; motor gasoline is trading around $192.830 per gallon after plunging $2.250; whereas natural gas contracts rose by $0.014 to record $5.430 per 1000 cubic feet. As for London, Brent contracts they declined $0.820 to record $71.31.
Crude future contracts opened today at $72.95; recording its highest at $73.60 and lowest at $72.50 per barrel, while currently trading around $73.00 per barrel.