Fundamental Oil Report (2010-02-19)

 @ibtimes
on February 19 2010 5:32 AM

NewsOil plunges this morning below $79 after the Fed's surprise decisionPreviousForecastAnalysis 

Crude contracts declined in Asia below $79 per barrel affected by the dollar’s raging strength versus majors, which followed the Fed’s unexpected discount rate increase. That reduced the appeal of commodities facing the dollar’s strength especially on oil which followed the reported rise in U.S stockpiles. 

Meanwhile, crude yesterday dropped by 2.2% after the dollar advanced against majors taking the euro to its lowest in about eight months, after the Fed decided to raise discount rates for the first time in three years; therefore insuring all expectations that the Fed will be the first central bank that will pull out all incentive plans it had presented during the downturn and reverse its monetary policy. However, this step is due to the improvement witnessed in the financial market since this step is considered to be an adjustment in loans and systems that deal with this rate.

The release of the weekly EIA report yesterday showed higher stockpile levels with are reported 3.1 million barrels buildup, compared to the previous week’s 2.4 million barrels and higher than expectations of 1.5 million barrels; crude stockpiles currently stand at 334.5 million barrels above their average range for this time of the year. Meanwhile, motor gasoline inclined by 1.7 million barrels last week and are still the above their medium term average; distillate fuel which include heating oil depleted by 2.9 million barrels yet still inventories are above their average for this time of the year. 

The fundamentals in the market support crude price to linger around $75 a barrel, especially affected by the dollar’s strength. Nonetheless, as oil is a growth related commodity, the rising optimism over the recovery and the outlook for economic growth from the United States in particular supports the rise for crude prices, which so far are expected to average this year around $75-$85 per barrel. 

The S&P GSCI index ended yesterday at 513.94 in with a drop of 4.61 points; whereas the RJ/CRB commodity index inclined by 2.31 to close at 276.15.

In NYMEX as of 04:00 EST; heating future contracts declined to $202.800 per gallon down by $2.360; motor gasoline is trading around $204.700 after dropping $2.220; whereas natural gas contracts followed and fell by $0.010 to record $5.162 per 1000 cubic feet. In London, Brent contracts plunged by $0.880 to record $76.900.

Crude opened today at $78.22 per barrel, recording its highest at $78.42 and lowest at $77.75 per barrel, currently trading around $78.15 per barrel. 

Crude contracts declined in Asia below $79 per barrel affected by the dollar’s raging strength versus majors, which followed the Fed’s unexpected discount rate increase. That reduced the appeal of commodities facing the dollar’s strength especially on oil which followed the reported rise in U.S stockpiles. 

Meanwhile, crude yesterday dropped by 2.2% after the dollar advanced against majors taking the euro to its lowest in about eight months, after the Fed decided to raise discount rates for the first time in three years; therefore insuring all expectations that the Fed will be the first central bank that will pull out all incentive plans it had presented during the downturn and reverse its monetary policy. However, this step is due to the improvement witnessed in the financial market since this step is considered to be an adjustment in loans and systems that deal with this rate.

The release of the weekly EIA report yesterday showed higher stockpile levels with are reported 3.1 million barrels buildup, compared to the previous week’s 2.4 million barrels and higher than expectations of 1.5 million barrels; crude stockpiles currently stand at 334.5 million barrels above their average range for this time of the year. Meanwhile, motor gasoline inclined by 1.7 million barrels last week and are still the above their medium term average; distillate fuel which include heating oil depleted by 2.9 million barrels yet still inventories are above their average for this time of the year. 

The fundamentals in the market support crude price to linger around $75 a barrel, especially affected by the dollar’s strength. Nonetheless, as oil is a growth related commodity, the rising optimism over the recovery and the outlook for economic growth from the United States in particular supports the rise for crude prices, which so far are expected to average this year around $75-$85 per barrel. 

The S&P GSCI index ended yesterday at 513.94 in with a drop of 4.61 points; whereas the RJ/CRB commodity index inclined by 2.31 to close at 276.15.

In NYMEX as of 04:00 EST; heating future contracts declined to $202.800 per gallon down by $2.360; motor gasoline is trading around $204.700 after dropping $2.220; whereas natural gas contracts followed and fell by $0.010 to record $5.162 per 1000 cubic feet. In London, Brent contracts plunged by $0.880 to record $76.900.

Crude opened today at $78.22 per barrel, recording its highest at $78.42 and lowest at $77.75 per barrel, currently trading around $78.15 per barrel. 

 

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