Crude falls on demand worries but weaker dollar provides support, ME in focus Crude oil lost some of yesterday’s gains as demand on oil proves to be weak following yesterday’s EIA report; however, the weakening U.S. dollar provides support to oil amid uncertainties over whether the central banks will roll back their stimulus programs. The EIA report showed that U.S. crude oil inventories rose 2.5 million barrels last week while gasoline inventories jumped 2.7 million barrels despite the start of the summer driving season, which shows demand is still soft. Distillates fell 1.2 million barrels. Adding to the downside pressures is a report released by the World Bank which shows the global economy will expand 2.2% this year, down from a January projection of 2.4%, while the EIA expects demand in the 2nd half of the year will be weaker than earlier projections. The U.S. dollar index is found near a four-month low at 80.60 as investors cut bullish positions amid uncertainties over whether central banks, including the U.S. Federal Reserve, will roll back their stimulus programs. Although oil prices should go down as China and Europe are not doing well while oil supplies in the U.S. are ample, price find more support from the rising tensions in the Middle East which trigger worries of a possible supply disruption. In Turkey, protesters returned to Istanbul’s Taksim Square a day after police used tear gas and water cannons to end the two weeks demonstrations; in Libya crude output fell to less than 1 million barrels a day after sabotage and labor unrest closed oil fields and ports. Markets will also focus today on the ECB’s monthly report, Italy’s bond auction, the U.S.’s retail sales and jobless claims and the equity markets after Nikkei close 6.35% down on disappointment from Bank of Japan, triggering sell-offs in other equity markets.
Posted on: Thu, 13 Jun 2013 10:49:51 +0000
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