Inside Financial Markets



SINGAPORE, July 18 (Reuters) – Brent futures slipped on Thursday on the back of a stronger dollar, but held above $108 a barrel as a drawdown in U.S. stockpiles for a third week buoyed hopes of a steady revival in demand growth.

The U.S. dollar edged higher versus a basket of currencies  .DXY, extending overnight gains as Federal Reserve Chairman Ben Bernanke pledged to keep monetary policy accommodative for the foreseeable future, weighing on commodity prices. USD/

But oil was underpinned by the fall in stockpiles after data showed refiners in the United States consumed the highest amount of crude since August 2005.

Brent crude  LCOc1 was trading 8 cents lower at $108.53 a barrel by 0536 GMT, after rising to a high of $108.70 and settling up 47 cents. U.S oil  CLc1 fell 2 cents to $106.46.

“The sharp drawdown in inventories is a big factor for oil markets as it shows refiners in the United States are processing more crude,” said Ken Hasegawa, a commodity sales manager at Newedge Japan. “With the Fed continuing with its stimulus, there is a lot of money to invest in oil and other commodities. There are not many sellers, but many buyers.”

U.S. crude oil inventories slumped almost 7 million barrels last week, according to data from the U.S. Energy Information Administration (EIA), adding to the near 20 million barrel draw in the two previous weeks.

The data showed U.S. refineries consumed the highest amount of crude oil since August 2005 – a net input of 16.23 million barrels per day (bpd). U.S. capacity to refine crude remained close to all-time highs reached in April. Last week, the capacity was at 17.814 million bpd, slightly under the peak of 17.819 million bpd. EIA/S

The successive drawdown in U.S. stocks, and expectations that the world’s biggest oil consumer is on track for a steady economic recovery, will help push U.S. oil to $110 a barrel by the end of the month, Newedge’s Hasegawa said. Brent will be about $2 more expensive than the U.S. benchmark, he said.



Bernanke said on Wednesday the U.S. central bank still expects to start scaling back its massive bond purchase programme later this year, but he left open the option of changing that plan if the economic outlook shifted.

While sticking closely to a timeline to wind down the bond buying that he first outlined last month, Bernanke went out of his way to stress that nothing was set in stone. (Full Story)

“Bernanke reminded markets that the timetable for tapering could be pushed back if the economy and labour market didn’t improve as expected,” analysts at ANZ said in a note. “He emphasised that tapering and interest rates (forward guidance) decisions remain independent, and that the timetable for tapering remains very much data-dependent.”

Brent for September is due for a deep correction, U.S. oil  CLc1 may bounce within a narrow range of $105.30-$107 for one trading session before falling towards $103.96, according to Reuters technical analyst Wang Tao. TECH/C


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)