|News||Crude off highs as jitters remain the dominant sentiment|
|Analysis||Crude traded below $74 per barrel this morning marginally lower following yesterday’s surge on better than expected manufacturing activity from China and the US, which offset the buildup in crude inventories.|
October delivery futures opened today at $73.91 recording the highest of $74.05 and lowest of $73.60 while trading at the time around $73.89. Crude yesterday ended with 2.77% gain to settle at $73.91.
The better than expected manufacturing figures yesterday had the biggest influence on the market, pressuring the dollar lower and supporting equities which all reflected positively on commodities. Investor unwound some of their fears over the outlook for the global economic recovery especially as China gathered the pace and seen not slowing as much as feared.
The bullishness engulfed markets yesterday and that was a strong support from the black gold and the risk appetite. US stocks ended with gains yesterday where the DJIA recorded the best performance in nearly two months ending higher by 2.54% to settle at 10269.47.
The weaker dollar was also a positive influence on crude, where the positive rush across markets weakened the green currency’s appeal as a haven driving the dollar index to its lowest at 82.18 down from the recorded highs of 83.21.
The positive sentiment offset the effect of the abysmal inventory status report. U.S commercial crude oil inventories increased by 3.4 million barrels from the previous week; at 361.7 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 0.2 million barrels last week, and are above the upper limit of the average range.
Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 0.7 million barrels, and are above the upper boundary of the average range for this time of year.
The volatility and the jittery sentiment will persist this week especially with the ECB rate decision today and housing data from the US; this comes alongside further clues on the labor market ahead of tomorrow’s jobs report. Investors are waiting for confirmations from the status of the labor sector in the US and its extent of weakness which will define the outlook for the nation and will either increase or berate the odds for a double dip recession.