Market sentiment was dampened amid weaker-than-expected economic data from the US and the Eurozone. Wall Street slipped with DJIA and S&P 500 losing -0.21% and -0.33% respectively. Oil prices remained firm with the prompt month contract for Brent crude surged to as high as 123.23 before settling at 122.9, up +1.02% while the equivalent WTI crude contract closed largely flat as investors were disappointed by the rises in oil inventories. Gold soared for a second consecutive day rising to a 3-month high of 1783.4 before ending the day at 1771.3, up +0.73%.

US existing home sales rose +4.3% to 4.57M in January but the December figure was revised lower to 4.38M. The market had anticipated a rise to 4.65M. The median sales price was down 2.0% from a year ago. The number of existing homes currently for sale, at 2.31M, is the lowest since 1Q05. Eurozone's PMI manufacturing index rose modestly to 49 in February but this missed market expectations of 49.4. In Germany alone, the index slipped to 50.1 in February from 51. The market had anticipated a rise to 51.5. The 17-nation services PMI fell to contractionary territory, slipping to 49.4 in February from 50.4 a month ago.

In China, while the official manufacturing data will be released next week, preliminary data compiled by HSBC and Markit showed that China's manufacturing activities may contract for a 4th month in February. The PMI index climbed to 49.7 in February from 48.8 a month. Despite an improvement, a reading below 50 indicates contraction in the manufacturing sector. The People's Bank of China reduced the reserve requirement ratio of banks by -50 bps over the week end so as to boost the economy. It's expected that the government will add further easing in coming months.

As the market awaited the official DOE/EIA inventory report, the industry-sponsored API estimated that crude inventory rose +3.55 mmb in the week ended February 17. Gasoline and distillates stocks also increased, by +0.31 mmb and +0.63 mmb respeictvley. The market anticipates crude inventory gained +1.35 mmb last week. For fuel products, the consensus is that gasoline stock gained +0.25 mmb while distillate fell -1.50 mmb.

Weekly change in inventory as of 10/02/11
Change
Consensus
Previous

Crude oil
 
+1.35mmb
-0.17 mmb

Gasoline
 
+0.25 mmb
+0.40 mmb

Distillate
 
-1.50 mmb
-2.87 mmb

Comparison between API and EIA reports:

       

 
 
API (Feb 10)
 
 
EIA (Feb 10)
 

 
Actual
Inventory
Previous
 
Forecast (using API's inventory level)
Inventory

Crude oil
+3.55 mmb
341.38 mmb
+2.90 mmb
 
-1.42 mmb
335mmb

Gasoline
+0.31 mmb
231.06 mmb
+1.81 mmb
 
-1.04 mmb
231 mmb

Distillate
+0.63 mmb
142.72 mmb
-2.16 mmb
 
-4.50 mmb
142 mmb

       

API collects stockpile information on a voluntary basis from operators of refineries. Data from the API and DOE have moved in the same direction 71% of the time over the past 52 weeks

Source: Bloomberg, API, EIA