Author: napara111

Financial markets eased from early rises after receiving disappointing ISM manufacturing data. The DJIA slipped after rising to 13032.67 while the S&P dropped after climbing higher to 1374.15. In the commodity sector, oil prices remained firm for a second day, with the prompt-month contract of WTI crude oil staying above 107.

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ISM Missed Expectations

Focus on financial markets today is on the ECB’s LTRO, with an expected gross drawdown of about 500B euro. Concerning stock market performance, Wall Street gained with the DJIA breached 13000 for the first time since May 2008 while the S&P 500 closed above its May 2011 high of 1370. Crude oil prices retreated further from multi-month highs with the prompt month contract of WTI crude oil slipping to a 3-day low of 106.30 before settling at 106.55, down -1.85%, while the equivalent Brent crude contract fell to a 4-day low of 121.5 before ending the day at 121.50, down -2.11%. Gold, as driven by euro’s strength soared for the first time in 3 days with the benchmark Comex contract rising to 1792.7, the highest level since November last year, before closing at 1788.4, up +0.76%.

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Awaiting ECB LTRO

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%.

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Oil Prices Remain Firm Although Economic Data Disappoints

The price of Brent oil futures moved back over $120 a barrel late on Thursday on crude oil supply worries and Brent traded near an eight month high as traders scrambled to line up alternative supplies amid outages in Yemen, South Sudan and worries about near term flows from Iran boosted prices.

Latest Brent Oil Price

In London, Brent crude oil futures for April 2012 delivery was trading at $120.23 a barrel, 07.35 GMT today on the ICE Futures Exchange.

The European contract ended Thursday’s session at $120.11 a barrel, or 1.1 percent higher.

Iran European Supply Cuts

Iran’s threat to cut off crude supplies to Europe, well ahead of a European Union embargo this summer, has sent jitters through the market as refiners in the region look for alternative supplies.

Meanwhile, some Asian buyers, backing away from Iranian crude amid tightening sanctions in response to Iran’s nuclear program, have been buying up other crudes favored by European refiners.

That buying spree, underpinning Brent, has been fueled further by a strike in Yemen that has shut in about 900,000 barrels of crude oil, usually bound for Asia. Meantime, supplies of South Sudan crude, have been missing from the market since January, further tightening the menu of crude available for Asian buyers.

Negotiators from Sudan and South Sudan are expected to begin talks next to resolve a dispute over transit fees that has kept output of some 450,000 barrels a day off the market.

“The numbers today are bullish, but the primary reason we are higher is the Iran fear premium.” said Todd Horwitz, chief strategist at Adam Mesh Trading Group, New York.

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Brent oil price moves over $120 a barrel on crude oil supply concerns

Brent oil futures open Friday’s trading session holding near $118 a barrel which are 6 month highs for the European oil contract whilst the spread to US WTI oil remains at around $18 a barrel, pulling back from near $20 earlier this week.

Latest Brent Oil Price

In London, Brent crude oil futures for March 2012 delivery was trading at $117.90 a barrel, 07.40 GMT today on the ICE Futures Exchange.

The European oil contract closed off Thursday’s trading session back at $118.72 a barrel, or 1.3 percent higher on the day.

Brent Oil Spread to WTI

Brent’s premium to US crude oil widened on Tuesday to more than $20 per barrel, its highest since October 2011, before a brief but sharp reversal by Brent and a rally by the US contract narrowed the spread back below $18 and left it at $17.82 based on settlements.

“The spread got above $20 and it looks like some big players came in and pulled it back.” said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.

China Oil Import Figures

Brent oil prices remain supported in part by China’s crude oil imports, which stayed firm last month, rising 7.4 percent from a year ago to 5.5 million barrels per day, its third highest on record.

Traders and analysts also pointed out that the Chinese data was distorted by the week long Lunar New Year break in January, adding that the long term oil demand outlook from China was still positive.

“Demand has been affected by seasonal factors. We expect GDP growth to accelerate in China as the government implements more stimulatory measures, and this will be positive for oil demand.” said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong.

Oil prices were also supported by positive economic data out of the US, where the number of Americans signing up for unemployment benefits fell unexpectedly last week, the latest sign of an economic recovery in the world’s top oil consumer.

Brent oil futures face a resistance at $118.65 per barrel and will retrace to $117.50, the February 7 high, while US crude oil prices will revisit the February 8 low of $98.10, according to analysts at Reuters.

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Brent oil price trading at $118 near 6 months highs as spread to US crude widens

The US Dollar Index remains under pressure this week after hitting two month lows after the currency gauge dropped below its 100 day moving average in trading patterns, Nomura Holdings Inc. reported, pointing to the possibility of a slide lower.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 78.860 at 07.28 GMT this morning, from the session open of 87.652.

The index slid as much as 0.8 percent to 78.488 on Tuesday, below its 100 day moving average of 78.747.

“When it breaks through its 100 day moving average, it tends to continue lower. Pension funds and real money managers, who manage foreign exchange, a lot of them look at 100 day moving average.” said Kurt Magnus, executive director of currency sales in Sydney at Nomura, Japan’s biggest brokerage, referring to the Dollar Index.

Aptly reflecting the US Dollar’s weakness is the fact that most major currencies, including the Japanese Yen, the Swiss Franc, and the Australian, New Zealand and Canadian Dollars are each approaching all time high points relative to the US Dollar.

The two notable exceptions to the overall weak Dollar picture have been the Euro and the UK Pound sterling, which have both declined substantially versus the US dollar in the latter part of 2011 due to the worsening European debt crisis and various sovereign debt downgrades.

The US Dollar has seen all time lows over the past year relative to hard currencies, such as silver and gold, making the case for continued holding of precious metals and oil prices continue to firm as the dollar remains weak.

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US Dollar Index remains under 79, short term direction maybe lower