NewsCrude near two year high on demand outlook PreviousForecastAnalysisCrude hovers around its strongest in two-and-a-half years after the Federal Reserve kept rates low and pledged to keep its loose monetary policy to stimulate growth. The drop in gasoline inventories added further support as the outlook for demand seemed stronger.
Crude oil hovers around $113.35 recording today the high of $113.68 and the low of $113.04 a barrel. Crude added to yesterday’s gains where it ended higher by 0.5% to $112.76 a barrel.
Oil was supported with Bernanke’s signal for the Feds to maintain their support for the economy even as the QEII was confirmed to expire in June. The rate was kept low, and the outlook for growth is good with the Feds upbeat on growth and employment.
Further support was attained from the decline in gasoline inventories as the EIA reported yesterday. Gasoline stockpiles fell 2.51 million barrels to 205.59 million barrels, the lowest level since August 2009. The decline in gasoline inventories offset the rise in crude stockpiles that surged 6.16 million barrels as imports rose.
Demand is a key element and especially when gauged from one of the world’s biggest consumers. The feds see recovery and growth which comes ahead of the first quarter growth figures due today. The US economy is projected to have slowed to 2.0% in the first quarter from 3.1% which with the ongoing optimism might be discarded and the focus will be on the continuing growth!
The dollar remained weak with the feds decision and comments, as investors focused on interest rate differentials and head to higher yielding assets. The dollar trended further south today as the dollar index declined to the low of 72.87 and now hovering around 73.01 below early highs of 73.37.
The volatility will remain evident today and tomorrow especially with the GDP from the US today and the income report tomorrow.