Demand worries overshadowed a drop in crude stocks after the Energy Information Administration (EIA) seemed to suggest refiners going into maintenance and a weakening demand for gasoline helped send the market higher.
A market selloff is underway. The dollar is sliding against global currencies after the Federal Reserve decision to keep interest rates level. Today’s news features a slump in global oil prices, a jump for gold and silver, a rising New Zealand dollar, and an update on the Chinese real estate market.
The day after crude oil prices rose almost 5% the dogma of the dollar versus oil inverse relationship has come to a screeching halt ahead of the most exciting FOMC meetings in a decade. As the Fed moves closer to raising interest rates and getting closer to a normalization of interest rate policy the correlation between the dollar and oil is breaking down.
U.S. crude oil production may be falling faster than many had thought and we are seeing signs of that in Cushing, Okla. Cushing is the Nymex delivery point and a storage facility that if you listened to the Ultra Bears was supposed to be overflowing with oil. Instead the opposite is happening as supply there have fallen five out of the last seven weeks and is slated to fall once again.
The comments by various Federal Reserve area officials at Jackson Hole Wyoming over the weekend left us more confused than before as both sides of the rate possibilities for September permeated the airwaves.
The U.S. economy grew faster than initially thought in the second quarter on solid domestic demand, showing fairly strong momentum that could still allow the Federal Reserve to hike interest rates this year.
At the end of the day it is all about the end of the day. While crude oil prices trade below $40 a barrel in crisis market price levels, it's taking its cue from the beleaguered stock market that can't hang onto a rally.
New U.S. single-family home sales rebounded in July and consumer confidence increased to a seven-month high in August, pointing to underlying strength in the economy that could still allow the Federal Reserve to raise interest rates this year.