Weak dollar fuels WTI crude oil
Published on November 25, 2009 05:49:11 IST
After a weaker US dollar propelled front-month WTI crude oil from $77.70/bbl to $79.92/bbl yesterday, concerns over
persistent US crude oil demand weakness saw the contract slip back to $77.13/bbl in late afternoon trade. Front-month WTI crude was directionless this morning, climbing to $77.80/bbl before retreating to $77.30/bbl as weak Asian markets, with the Shanghai Composite and Nikkei shedding 3.45% and 1.01% respectively, which weighed on crude oil sentiment.
According to a Bloomberg survey, US DOE crude stockpiles are expected to have gained 1,500K barrels last week, while official DOE data is due to be released tomorrow. We believe the combination of a weaker US dollar and US crude oil demand-side concerns could sustain high oil price volatility today.
On the economic data front, the spotlight turns to the revised US Q3:09 GDP and consumer confidence data — market expectations are for US GDP growth to be revised to 2.8% q/q, from a previous 3.5% q/q.
Thermal coal contract prices were steady yesterday amid firmer crude oil prices in Europe. There were some positive signals in the Asia-Pacific region as data at the Newcastle Coal Terminal, Asia’s main coal hub, showed a weekly contraction in thermal coal inventories, while the shipping queue grew from 35 to 38 vessels last week.
Coal export tonnage at the Newcastle terminal contracted 5.19% w/w — which we believe is a result of congestion and lower Chinese thermal coal import demand. Carbon contracts were a mixed bag yesterday. ICE EUA for December 2009 delivery gained EUR0.02/mtCO2, to EUR13.08/mtCO2; UN-backed CER for December 2009 shed EUR0.01/mtCO2, to EUR12.18/mtCO2.
