Crude oil: Riding for a fall?
Speculative money drove crude oil to hit an all-time high of $112.21 this week. In a situation not disimmilar to what we have witnessed in the grain markets, spec money is pouring into oil, completly ignoring the fundamentals.
US usage has been lower than last year for ten consecutive weeks. A clear sign that the credit crisis and surging energy prices are curbing demand.
"You look at the supply and demand fundamentals in the transportation fuel market, demand has been weak," said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. "The fundamentals don't support the rally in oil pricing so some caution has returned to the market."
"The demand situation is deteriorating all the time," said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. "There is a disconnect between the price of oil right now and what the data is telling us in terms of demand slowing down."
Federal Reserve officials anticipated the U.S. economy will shrink in the first half of the year and expressed some concern about "a prolonged and severe economic downturn" as they cut interest rates last month, according to minutes of the March 18 Federal Open Market Committee meeting, released April 8.
U.S. implied fuel demand averaged 20.5 million barrels a day in the past four weeks, down 0.4 percent from a year earlier, the Energy Department said.
"Everyone seems to be blithely ignoring the fundamentals of supply and demand at the moment," said Commodity Warrants' Menzies. The economic situation in the U.S. "should be having an impact on people's perceptions of what demand will do in the next three months."
US usage has been lower than last year for ten consecutive weeks. A clear sign that the credit crisis and surging energy prices are curbing demand.
"You look at the supply and demand fundamentals in the transportation fuel market, demand has been weak," said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. "The fundamentals don't support the rally in oil pricing so some caution has returned to the market."
"The demand situation is deteriorating all the time," said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. "There is a disconnect between the price of oil right now and what the data is telling us in terms of demand slowing down."
Federal Reserve officials anticipated the U.S. economy will shrink in the first half of the year and expressed some concern about "a prolonged and severe economic downturn" as they cut interest rates last month, according to minutes of the March 18 Federal Open Market Committee meeting, released April 8.
U.S. implied fuel demand averaged 20.5 million barrels a day in the past four weeks, down 0.4 percent from a year earlier, the Energy Department said.
"Everyone seems to be blithely ignoring the fundamentals of supply and demand at the moment," said Commodity Warrants' Menzies. The economic situation in the U.S. "should be having an impact on people's perceptions of what demand will do in the next three months."
