|News||Crude climbed above $85 supported by the drop in US inventories and Chinese growth|
|Analysis||Crude stabilized this morning above $85 after the Chinese economy grew at a better than expected pace, especially after US inventories fell last week for the first time in 11 weeks; pointing to the beginning of improvement in demand on oil from the largest oil consumer in the world.|
The release of yesterday's EIA report showed a drop in crude inventories by 2.2 million barrels, compared to previous buildup of 2.0 higher than expectations for 1.4 million barrels, where it is currently around 354.0 above the medium term average range for this time of year. Motor gasoline dropped by 1.1 million barrels last week and still is above the medium term average range; while, distillate fuel that includes heating climbed by 1.1 million barrels above the medium term average range for this time of year.
The EIA yesterday insured that demand rose on motor gasoline by 1.3% around 9.14 million barrels per day last week after this biggest jump since August 2004, where signs showed that oil imports fell to their lowest since last month.
Meanwhile, US stocks noticeably inclined yesterday; the Dow Jones closed around is highest levels since September 2008 around 11123.11, specifically after companies spearheaded by JP Morgan released good earnings that appeared to be better than expectations. Furthermore, Asian stocks continuing rising this morning supported by Chinese data.
The Chinese economy today released its GDP for the first quarter of the current year, where they recorded an expansion in growth in the first quarter by 11.9% better than analyst expectations in markets that were pointing to growth by 11.7%.
Alongside annual expanding growth levels in China, they showed an improvement in retail sales and consumption prices. The improvement witnessed in the Chinese economy supports all expectations that it will be one of leading global countries that will lift the economy from the recession, the worst since the Great Depression.
On our agenda today is the US Empire Manufacturing index and Philadelphia Fed index, where both seem to be rapidly improving and therefore pushing oil prices to continue ascending, especially since oil is an essential material that is used in a wide range of manufacturing companies.
Crude opened yesterday around $83.800 recording its highest around $86.350 and lowest around $83.730 per barrel, where it closed around $85.920 per barrel.
The S&P GSCI index closed late recording 552.41 after it climbed by 8.49; whereas the RJ/CRB commodity index also gained by 2.61 to close around 279.96.
In NYMEX as of 02:49 EST; motor gasoline dropped to record $229.590 per gallon by 0.070; heating is trading around $224.300 per gallon after climbing by $0.007 to record $4.192 per 1000 cubic feet. In London, Brent rose by $0.200 to record $86.350.
Crude opened today around $85.870 recording its highest around $86.220 and lowest around $85.800 per barrel, where it is currently trading around $85.800 per barrel.