NewsEIA Report
Previous-2.3 Million Barrels
Forecast1.5 Million Barrels
AnalysisCrude oil futures started the day with volatility and downside tendencies as the contracts traded in a very tight range ahead of key data from the US with supply figures and the Feds rate decision.

Crude is currently trading around $111.86 a barrel down off the high at $112.45 and above the lows at $111.70 per barrel. Crude also traded in a tight range yesterday and ended lower by 7 cents at $112.21 per barrel.

The market is jittery ahead of the FOMC rate decision and the new projections awaited from Bernanke today. The bets that the QEII is coming to an end is support for the dollar, while any downbeat comments from Bernanke on the outlook for growth and pressure from rising commodity prices will surely pressure crude to the downside.

Saudi comments yesterday signaled the discomfort from high oil prices and the effect on economic growth, while Timothy Geithner seconded the option by calling them an obstacle to economic growth.

Supply data are also under the focus today. The American Petroleum Institute (API) said yesterday the crude stockpiles rose the most in four weeks while gasoline inventories dropped for the tenth consecutive week.

The EIA report is also expected to report a buildup in crude inventories today by 1.5 million barrels in the week ending April 22; gasoline inventories are expected with 1.0 million barrel drop. With downbeat markets over rising prices the focus will be on the crude buildup, while an upbeat sentiment will focus on the decline in gasoline inventories amid the focus summer driving season.

High volatility is expected to prevail for crude today and for the rest of the week. We have durable goods orders from the US expected with a rise, the EIA report and then the FOMC decision and Bernanke’s press conference. Above all that, for the rest of the week we have GDP figures from the US and spending data and any weak signals will be a strong downside pressure on crude.

The overall outlook remains bullish unless the data was a surprise and indeed worse than expectations.