|News||Crude drops below $81 in the morning session|
|Analysis||Crude dropped in the morning session below $81 per barrel due heightened fears regarding global economies raising benchmark interest rates, like India, where expectations of a quick economical recovery from developing countries like India could spark inflationary risks and their rein on that ignited fears over the pace of the recovery.|
The Indian central bank announce unexpectedly late last Friday interest rate increase for the first time since July 2008, where reserve repurchase rate was raised to 3.5% from 3.25%; and the repurchase rate was raised by the same amount to 5.0% from 4.75%.
This sudden and unexpected decision pushed U.S. stock and commodity indices to decline, fears increased over the negative effects on the global economic recovery, which would be further affected by the drawing of incentive plans.
Meanwhile, crude contracts jumped last week to $83 per barrel, compared to trading levels near $69 per barrel last month. The rise was supported by expectations of growing demand levels globally on oil, but rising inventories in the U.S. are preventing prices from continuing their gains.
The S&P GSCI index closed the evening session last Friday to record 529.38 after dropping by 2.82; whereas the RJ/CRB commodity index stabilized to close at 275.68.
In NYMEX as of 03:56 EST; future heating contracts dropped to record 206.420 per gallon by $0.60; motor gasoline is trading around $224.590 per gallon after plunging by $0.970; whereas natural gas fell by $0.046 to record $4.123 per 1000 cubic feet. In London, Brent fell back by $0.430 to record $79.450.
Crude opened today at $82.02 per barrel to record its highest at $82.42 and lowest at $80.12 per barrel, where it is currently trading around $80.40 per barrel.