Market sentiment markedly improved yesterday as driven by encouraging German IFO data and the US initial jobless claims. Wall Street soared with the DJIA attempted to breach 13000 again. The bourse ended the day +0.36% higher. The S&P index also rose +0.43%. WTI crude oil prices jumped to 108.74, the highest level since May last year, before settling at 107.83, up +1.46%, while the equivalent Brent crude contract jumped to as high as 124.5 before settling at 123.62, up +0.58%, Gold rose to as 3-month high of 1789.5 before ending the day at 1786.3.

Germany's IFO data surprised to the upside. 'Current Assessment' index climbed to 117.5 in February from 116.3 a month ago. The market had anticipated a mild improvement to 116.5. 'Business Climate' rose to 109.6, compared with consensus of 108.8 and January's 108.3. 'Expectations' index also soared to 102.3 from 100.9 in January. In the US, initially jobless climbed +3K to 351K in the week ended February 18. The market had anticipated a bigger increase to 355K. The 4-week moving average fell by -7K to 359K, the lowest reading since March 2008.

As the second Greek bailout package has been approved, the next focus will be on the size. There have been speculations that the size of the ESM will be increased or combined with the EFSF. The G-20 summit over the weekend is also expected to focus on the Eurozone crisis. Although the package is approved, the real challenge is implementation of Greece's austerity measures. The debt-ridden country is required to lower its debt to GDP ratio to around 121% by 2020, from the current 160%. The difficulty is further increased when the economic outlook is deteriorating. According to the European Commission's assessment of Europe's economic outlook, the Eurozone economy will contract -0.3% q/q in the present quarter and by -0.3% in 2012 as a whole. The EU Economic and Monetary Commissioner Rehn stated that 'although growth has stalled, we are seeing signs of stabilization in the European economy'.

According to the DOE/EIA weekly report, total crude oil and petroleum products stocks rose +3252 mmb to 1058.92 mmb in the week ended February 17. Crude stockpile increased +1.63 mmb to 340.71 mmb although stocks fell in 3 out of 5 PADDs. Cushing stock slipped -0.32 mmb to 32.17 mmb. Utilization rate increased +1.5% to 85.5%

Gasoline inventory dipped -0.65 mmb to 231.53 mmb although demand increased +1.59% to 8.17M bpd. Production climbed +2.13% to 8.98M bpd while imports jumped +54.2% to 0.85M bpd. Distillate inventory slipped -0.21 mmb to 143.51 mmb as demand rose +10.91% to 3.81M bpd. Imports fell -7.58% to 0.12M bpd while production dropped -2.21% to 4.30M bpd during the week.

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

Crude oil
340.71 mmb
+1.63 mmb
+1.35mmb
-0.17 mmb

Gasoline
231.53 mmb
-0.65 mmb
+0.25 mmb
+0.40 mmb

Distillate
143.51 mmb
-0.21 mmb
-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