March crude oil prices trended lower throughout the overnight and early morning hours, pressured by a weak outside market tone. Fresh concerns that Greece could face a potential debt default, disappointing foreign direct investment data in China, and reports that Moody's could downgrade ratings on 17 major investment banks have soured the mood. Global equity markets are lower across the board, and the US dollar has broken out to its highest level since January 25th. The weak outside market tone offers a negative for the crude oil market to start. Meanwhile, crude oil prices draft support from Iran tensions, reduced export flow out of Sudan and forecasts for decreased North Sea output. It is possible that some of the Iranian fear premium could be easing after minor suggestions that Iran would like to pick up on talks with Western leaders over its nuclear program. Yesterday's crude oil inventory data from the EIA showed an unexpected decline last week of 171,000 barrels. This left current supplies at a 6.842 million barrel deficit compared to year ago levels, but 6.294 million barrels above the five year average. Crude oil imports for the week stood at 8.756 million barrels per day compared to 8.413 million barrels the previous week. It seems like a portion of that draw came in the wake of a considerable jump in the refinery operating rate of 1.2% to 84.0%, compared to 81.2% last year and the five year average of 82.39%. Some traders viewed the jump in refinery capacity as a surprise given the number of refinery snags experienced last week. Into yesterday's high, March crude oil prices were up 7.4% from the February low and reached short term overbought conditions. This leaves the crude oil market more dependent on supply disruption concerns to continue to drive prices higher. With a weak outside market tone to start this morning already weighing on March crude oil, signs of further easing in Middle East supply concerns is likely to pressure prices further.
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