By Leon Westgate
A bearish close for crude oil yesterday, with front month WTI finishing below $80/bbl, has robbed the market of its recent momentum. Crude oil remains range bound, and closely tied to the dollar; however it appears to be struggling again.

A weaker dollar has seen prices climb back above $80/bbl heading into the afternoon, but the market appears to be consolidating rather than anything else.

Aside from the FOMC decision, the main energy specific data are the API inventories later today and the DOE inventory figures tomorrow. While the general trend for gasoline and distillate stocks has been reasonably bullish, crude oil inventories have been increasing for the past 7 weeks.

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Consensus expectations are for those trends to continue, with DOE crude oil inventories expected to climb by 1.5 million bbl, Gasoline stocks to decline 0.5 million bbl and distillates to fall by 1.3 million bbl.

Meanwhile, OPEC is meeting tomorrow in Vienna to discuss output levels. Consensus expectations are for the production targets to be maintained, a view reinforced by the Saudi oil minister who said he is extremely happy with the current market.

Coal shrugged off the weakness seen in crude oil prices, with API2 for Q2-10 climbing $0.45to $75.20/mt. API4 for Q2-10 lagged behind a little, posting a $0.15 gain to close at $82.50.

Courtesy: Standard Bank

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