Crude oil prices down on inventories and strong Greenback

10-18-2009 13:04

Investors doubted if an $8-per-barrel rally since last week’s trading session was guaranteed as worldwide oil equities continue their high rates, on which crude oil prices dropped while they posted the highest level in a year, $78 per barrel, yesterday.
The US has the highest energy consumption in the world and its crude oil and refined products stocks are still above the levels of last year. Sucden Financial trader Rob Montefusco commented: “It’s not attractive to buy oil if you consider the large inventories of crude oil.”

Crude oil prices

For the first time in seven trading sessions, American crude oil futures dropped 23 cents per barrel to $77.35 at 17.05, while they previously reached $78.17; the highest level in a year. The Brent Crude oil marker fell 32 cents to $75.91.
Thursday, the United States Energy Information Administration (EIA) published data that showed that American crude oil and product equities, not including strategic reserves, continued its level above 1.1 billion barrels during the week that ended 9 October. Equities rose in comparison to last year’s rates of 976 million barrels.

Greenback up

A rising Greenback and weakening confidence among US consumers also contributed to the falling oil rates, which may hinder a possible improvement in fuel demand. A stronger Greenback results in higher oil rates for holders of non-Dollar currencies.
The Greenback rose 0.2% yesterday versus several main currencies, while it earlier posted the highest level in 14 months.

Positive sentiment

A positive sentiment towards an economic recovery has resulted in risk appetite among investors, selling Greenbacks and reinvesting money in stocks and commodities, which led to rising oil rates.
General Electric and Bank of America released gloomy quarterly corporate results, which indicated that the recovery of the US economy may decelerate and decline American equities indices by more than 1%.

Gloomy situation

The Reuters/University of Michigan Surveys of Consumers stated that its initial index regarding October’s sentiment dropped to 69.4, while September showed a reading of 73.5, which was the result of the “gloomy” situation of personal finances. Figures by the United States administration demonstrated that refineries strongly decreased their chargeability ratios last week.
Yesterday’s figures by the Federal Reserve System proved that industrial production in the US advanced in September for a third straight month.