Oil steady above $83 as market shrugs off downgrades
Posted by qiusisi on Thursday, May 6, 2010
Standard & Poor's on Wednesday cut Spain's rating one notch a day aftercheap air jordan shoes lowering Greece to junk status and downgrading Portugal, boosting concerns of spreading sovereign credit risk. But the Federal Reserve left interest rates near zero and gave an upbeat assessment of the U.S. economy. Crude was also getting support from expectations that gasoline use in wholesale air jordan shoesthe United States will accelerate during the driving season between late May and early September. Demand in the world's top gasoline consumer jumped 3.1 percent innike air jordan shoes the past four weeks from a year earlier, causing an unexpected drop in gasoline stockpiles last week, government statistics showed on Wednesday. "The market is too optimistic about the whole situation," said Clarence Chu, an energy trader at Hudson Capital Energy in Singapore, adding that its resilience to the European debt crisis was "quite bullish." "People saw all the downgrades coming since a month ago, but oil isair jordan shoes still quite strong," Chu said. "If you look at the charts for the past week or so, it seems like the market is quite comfortable around the $84 level." U.S. crude for June delivery shed 14 cents to $83.08 a barrel by 2:32 a.m. ET, after climbing almost 1 percent on Wednesday, boosted by rising stock markets. Prices are about $4 lower than an 18-month high above $87 reached on April 6. ICE Brent crude for June slid 16 cents to $86, keeping a $3 premium toair jordan front-month U.S. crude after stockpiles at the Cushing, Oklahoma, delivery point for West Texas Intermediate crude climbed for a sixth consecutive week. Total U.S. crude stockpiles rose by 1.9 million barrels in the week to April 23, the Energy Information Administration said on Wednesday, more than a forecast 1-million-barrel increase. FULL OF CONTRADICTIONSjordan shoes An oil glut in the U.S. Midwest is creating distortions in oil futures markets. The front-month WTI contract, which usually trades at a premium to ICE Brent, this week has reached its biggest discount against the European benchmark in eight months. "The U.S. (oil) market is full of contradictions and dislocations atnike air jordan the moment," said Barclays Capital analysts headed by Paul Horsnell in a weekly note, describing it as "a combination of pockets of tightness and pockets of surplus." Barclays said, "In short, the overall crude inventory surplus is still falling, but it has become entirely concentrated in just one region of the country." Abundant supplies in the Midwest are also increasing incentives to Monclerstock more oil by depressing the value of prompt crude relative to contracts for later delivery. This market structure, known as contango, has shown discounts of about $2.50 for the front month WTI contract to the second month in the past two days. But total U.S. crude inventories have been rising by less than the seasonal norm, according to Barclays. And gasoline stocks fell by 1.2 million barrels last week, compared with estimates for an 800,000 barrel gain. "The inventory report is not as bearish," Chu said. "There is aMoncler outlet surprise draw in gasoline." Distillates including heating oil and diesel rose by a larger-than-expected 2.9 million barrels, while the country's total oil demand climbed 1 percent from a year earlier, according to the EIA. "The driving season in the U.S. is going to be a big indication of whether demand is actually recovering," Chu said. The oil market was paying little attention to currency moves on Thursday, when the dollar weakened by about 0.1 percent against a basket of currencies as the euro recovered from one-year lows a day earlier.