Oil prices moved narrowly with a mildly downward bias. Investors readily ignored the impacts of Hurricane Irene on oil output. According to the US national Hurricane Center, the Category 3 hurricane is expected to strike North Carolina later today. It's said that the storm is on a 'worst-case track' for the East Coast. The DOE/EIA's data showed that the East Coast has 10 operating oil refineries with a capacity of 1.21M bpd, accounting for 7.1% of US's operating capacity. While evacuation of staff will disrupt production, investors worried more about demand than supply, especially both Citigroup and UBS downgraded their global economic forecasts.
Citigroup cut its 2011 global GDP growth forecast to +3.1% from +3.4% estimated last month, and lowered the 2012 global growth forecast to +3.2% from +3.7%. UBS trimmed its 2012 global growth forces to +3.3% from +3.8%. Both banks expect the Fed, the BOJ and the ECB will leave their policy rates unchanged through next year. Growth in advanced economies has been struggling for some quarters. In their latest forecasts, both Citigroup and UBS unveiled that emerging markets have also shown fatigue with China's growth being revised down to 9% this year.
The market focus today is obviously on Bernanke's speech at Jackson Hole. Speculations that the Chairman will hint additional easing measures were tamed after some better-than-expected data were released over the past few days. Some analysts expected that further asset buying, if any, would be less effective than previous ones.
As far as the dataflow is concerned, US GDP growth was probably revised lower to +1.1% in 2Q11 from the preliminary estimate of +1.3%. The final reading of University of Michigan confidence might have been lifted upward to 56 in August from 54.9 in previous projection.