NewsEIA ReportPrevious1.9 million barrelsForecast0.6 million barrelsAnalysisCrude futures managed to record its lowest in a week due to the dollar's gain against the euro, especially after renewed fears in markets regarding the wide spread debt crisis throughout the European continent. Supporting the drop in investors' interest in purchasing commodities was the manufacturing sector in China slowdown to the lowest in six months, where China is the second largest energy consumer in the world after the US.
Crude yesterday dropped at the fastest pace since three months after the euro versus dollar dropped to its lowest level in 12 months, due to rising fear that Spain and Portugal are threatened to follow Greece as debt-laden nations suffer with continued surge in borrowing costs which pressure further credit rating downgrades and default possibility, especially with Spain's nearing July redemption.
In addition, crude futures were also affected by the direct drop in China's PMI manufacturing in April to its lowest in six months. This news caused a pessimistic wave to overshadow markets, since hopes are depending on China and the Asian Pacific that will lift global economies from the worst economic crisis since the Great Depression.
The API also added bearish pressure by reporting a rise in crude inventories by 2.95 million barrels last week, however, this report insures weakened demand in the US and supports an increase in US inventories that is expected in today's awaited EIA report; where expectations point to higher inventories by 0.6 million barrels compared to the previous buildup of 1.9 million barrels.
Crude future contracts opened yesterday around $86.05 recording its highest around $86.20 and lowest around $82.05 per barrel, where it managed to close around $82.05 per barrel.
The S&P GSCI index closed yesterday at 535.67 after dropping by 17.36 points; whereas the RJ/CRB commodity index followed and fell by 6.50 to close around 271.60.
On the other hand, NYMEX as of 02:29 EST; motor gasoline dropped to record $231.590 per gallon by $0.630; heating is trading around $225.900 per gallon after dropping by $0.050; whereas natural gas rose by $0.012 to record $4.025 per 1000 cubic feet. In London, Brent dropped by $0.070 to record $85.600.
Crude opened today around $82.15 per barrel recording its highest around $82.60 and lowest around $81.85, where it currently trades around $82.50 per barrel.