There is very good weather in Saint-Petersburg (Russia) now and a lot of people and some of my colleagues from FBS Company have holydays. But the oil market has no summer vacations. Every day in the oil market happens a thousand of the events. About the events of previous week I would like to write in the Dealbreaker Community.
P.S. I apologise for my long message:)

06/29/2009 Monday
Oil futures ended above $71 a barrel on Monday, rallying after an attack on an oil platform in Nigeria rekindled supply worries. Light, sweet crude for August delivery rose $2,33, or 3,3%, to end at $71,49 a barrel on the New York Mercantile Exchange. Earlier, the contract soared to an intraday high of $72,40 a barrel. Oil prices have rallied 37% over the last three months.
Earlier Monday, the Movement for the Emancipation of the Niger Delta said that it had struck at the Shell Forcados offshore platform in Delta state, the report said. Nigeria is a key exporter of crude. In the currency markets, the dollar was mixed against most other major currencies. The greenback rose against the Japanese yen, while the dollar fell against the euro and the British pound. Dollar weakness typically boosts dollar-denominated commodities such as oil.
Meanwhile, the International Energy Agency revised lower its forecast for global oil demand, but energy traders shrugged it off.
A Japanese news report Monday said China plans to increase its strategic crude-oil reserves by 160% over the next five years.

06/30/2009 Tuesday
Crude-oil futures lowered Tuesday as US data showed faltering consumer confidence and falling home prices, setting back hopes for a recovery and higher oil demand. Despite the loss, oil rallied 41% in the second quarter.
Crude for August delivery fell $1,60, or 2,2%, to end at $69,89 a barrel on the Nymex. Earlier, it had surged as high as $73,38 a barrel, the loftiest level in eight months. Crude rose 5,4% in June, extending its monthly winning streak to five. It has gained 57% in the first half of the year.
A stronger dollar weighed on crude. In the currency market, the dollar strengthened against most of its rivals. Gains for the greenback typically weigh on dollar-denominated commodities such as oil because it makes them more expensive for holders of other currencies.
Also Tuesday on the Nymex, July reformulated gasoline lost 2% to $1,8972 a gallon, while July heating oil fell 3,7% to $1,718 a gallon. The gasoline and heating oil contracts expired on Tuesday.
In Asia, China hiked domestic gasoline prices in announcement late Monday, according to media reports. Retail prices will rise by 8,6% for regular gasoline and by 9,6% for diesel, the reports said. At just over $3 a gallon, Chinese motorists will now pay about one-eighth more for a fill-up than Americans, who were paying an average $2,66 a gallon last week, Reuters reported.

07/01/2009 Wednesday
Oil futures have fallen below $70 a barrel as government data showed crude inventories at a key delivery point rose for the first week in five and gasoline stockpiles increased for a third week. Weak demand pushed up total petroleum product inventories for the 14th consecutive week.
August crude futures fell 2,2%, to $69,89 a barrel on the New York Mercantile Exchange. Oil ended second quarter’s trading up 41%, the biggest three-month gain in 19 years.
The Energy Information Administration reported Wednesday that crude oil inventories at Cushing, the delivery point for Nymex crude futures, rose 200,000 barrels to 28,6 million barrels in the week ended June 26, rising for the first week since the week ended May 22.Meanwhile, gasoline inventories increased 2,3 million barrels and distillate stockpiles, which include heating oil and diesel, gained 2.9 million barrels. Gains in both products came bigger than expectations.
The EIA seems to lag the API so we are seeing a drop in crude.
Energy traders also digested a series of economic reports on Wednesday. Companies in the U.S. private sector shed 473,000 jobs in June, according to the ADP employment report released Wednesday. The report comes one day before the Labor Department reports on nonfarm payroll growth for June.
Separately, the pending home sales index rose 0.1% in May after an upwardly revised gain of 7.1% in April, the National Association of Realtors said.
ISM index rose to 44.8% in June from 42.8% in May.

07/02/2009 Thursday
Oil futures tumbled nearly 4% Thursday, reaching their lowest level in one month and posting their third weekly loss in a row, as a disappointing jobs report rekindled concerns over when a recovery may begin to take hold.
The Labor Department said Thursday that nonfarm payrolls shrank by 467,000 in June, a bigger drop than the decline of 325,000 expected by economists. Also weighing on crude prices, the dollar strengthened against most of its rivals. The Labor Department report also showed the unemployment rate ticked higher to 9.5% in June, the highest since August 1983.
August crude futures dropped $2.58, or 3.7%, to settle at $66.73 a barrel on the New York Mercantile Exchange, the lowest closing level for a front-month contract since June 3.
Futures lost 3.5% this week. Trading is closed Friday in observance of the Independence Day holiday.
The Energy Information Administration reported Wednesday that total U.S. petroleum-product inventories rose for the 14th consecutive week as demand remained weak.
The EIA data also showed total crude inventories excluding those in the Strategic Petroleum Reserve marked a decline. The inventories, however, still stood above the upper boundary of the average range for this time of year, according to the agency.
On the fundamentals level, high levels of inventories, low demand and sufficient supply continue to point to lower prices.

07/03/2009
Independence Day holiday in U.S.
So, following the results of a week from June, 23th till July, 3rd 2009, oil quotations have decreased in comparison with the last week. Brent price have fallen to $65,6 per barrel, the decrease for a week has made 4,8%. WTI price has fallen to 3,5% to $66,73 per barrel. We feel crude is due for a correction in the coming weeks.

Fundamental review.
The pound was 0.5% higher versus the dollar. The Britain pound bought 1,6499 American dollar.
Last week a lot of the macroeconomic statistics and news was published in Great Britain. Many data carried a negative shade.
- U.K. inflation continued to fall in May but, not for the first time in recent months, the deceleration was much less sharp than expected. Hence, the CPI rose firmly by 0.6 % in comparison with April that, while largely seasonal, was enough to see just a 0.1 percentage point drop in the 12-month rate to 2.2 %. CPI inflation accordingly remains above its 2 % target.
- Recent comments from the BoE have been deliberately cautious about the U.K. economy’s recovery prospects.
- Annual average earnings growth accelerated to 0.8 percent in the three months to April. The outcome, which followed a slightly smaller revised 0.3 % decline in March, was above expectations but still low enough to underline the lack of any significant inflationary pressure in the domestic labour market.
- The number of people out of work rose by a further 39,300 on the month to 1,544,800 in May. The rise, which was smaller than expected, lifted the jobless rate by 0.2 % points to 4.8 % from a weaker revised 4.6 percent in April.
- On the ILO measure, joblessness climbed by some 232,000 in the three month to April. The increase took the number out of work to 2,261,000 and lifted the jobless rate to a slightly lower than expected 7.2 %, still its highest level since the second quarter of 1997.
- Retail sales volumes were unexpectedly weak in mid-quarter when volumes fell 0.6 % from April to stand 1.6 % lower on the year.
My colleagues from FBS company and I keep frostily negative forecast on the British pound.

Fundamental review.
Last week EUR/USD has fallen by 1,5 %.
Last week has been sated by the European economy macroeconomic data. The index of business activity in industrial sector has grown to 40.7 points and in services sector to 44.8. Retail sales in April have a little grown up, however, annual dynamics remains negative - retail sales has declined by 2.3%. All other reports carried the extremely negative shade. Gross national product for 4 quarter of 2008 was reduced to 2.5%, the data for 4 quarter has been reconsidered, as a result annual falling of gross national product has made 4.8%. My colleagues from FBS company predicted falling to 4.6 %. The unemployment rate continued prompt growth and has reached 9.2%. Producer prices for April have dropped to 1.0%, and annual falling has reached 4.6%. These are record values from the beginning of indicator calculation since 1980.
The European Central Bank, which sets interest rates for the 16-nation euro zone, held its key rate at 1% and said it will launch a €60 billion program to buy low-risk bonds in July. ECB President, Jean-Claude Trichet, speaking at a news conference following the central bank’s decision, forecast the pace of the bloc’s sharp slowdown will ease this year. Mr. Trichet called the current 1% policy-rate level “appropriate.”
The situation in Europe will continue to remain difficult; the rate of unemployment can already exceed 10% level. Many European countries are subject to risk of sovereign obligations defaults. German chancellor A. Merkel has scarified the US Federal Reserve System and the Bank of England because of their active monetary issue.
However, in view of EUR/USD strong growth which in May has grown by 6,7 % (from the beginning of March euro has risen by 12%!), analysts of the largest European banks (Deutsche Bank, UBS and Barclays Capital) recommend to sell euro. UBS experts don’t exclude that within three months euro can drop to $1,30 level.
Investors, against negative macrostatistics, left highly remunerative currencies, preferring the American dollar and US treasuries.
1/ US Factory Orders index in April has grown only by 0,7%, instead of expected 1,1%.
2/ ISM non-manufacturing index in May has reached 44,0 in comparison with 43,7 in April and contrary to expectations of 45,0. This indicator is above 50 throughout eight months on end, specifying economic activity reduction.
3/ The number of workplaces in the American companies in April has decreased by 545 thousand, according to report of ADP Employer Services.
Payroll employment in May was unexpectedly and significantly less negative than in recent months. But the unemployment rate also was a sharply higher than projected. Nonfarm payroll employment in May fell only 345,000, following a decrease of 504,000 in March and a drop of 652,000 in February. The May drop-off was not as severe as the consensus forecast for a 530,000 decrease. March and February revisions were up a net 82,000. For the latest month, losses were widespread in both goods-producing and services-providing industries.
By major categories, goods-producing jobs fell 225,000 in May, led by a 156,000 drop in manufacturing employment with motor vehicles & parts down 30,000. Construction declined 59,000 while natural resources & mining decreased 10,000 in the latest month. Service-providing payrolls fell only 120,000 in May after dropping 230,000 the month before. The latest decline was led by a 51,000 decline in professional business services, a 30,000 fall in financial activities, and a 22,000 decrease in wholesale trade.
On a year-ago basis, payroll jobs were down 3.9 percent in May, compared to down 3.7 percent the month before.
Wage inflation remained very soft in May as average hourly earnings posted a 0.1 percent gain, matching the rise in April and coming in below the consensus forecast for a 0.2 percent rise. The average workweek edged down to 33.1 hours from 33.2 hours in April.
The yield on the benchmark 10-year Treasury note rose to a seven-month high.
Last week the US dollar has made prompt jerk upwards that can signal about end of American currency downward trend.

Fundamental analysis.
The euro traded at $1.4089, up from $1.3883 Monday. The dollar index, a measure of the greenback against a basket of major currencies, fell to 79.751, down from 80.961 in North American trading Monday afternoon.
The euro traded at $1.4089, up from $1.3883 Monday.
The U.S. dollar declined Tuesday, reversing a steep increase over the past few trading sessions, as investors questioned the long-term staying power of the greenback’s recent resurgence.
The dollar fell as a pop in oil prices and stability in U.S. stock markets boosted risk appetite and sent investors into currencies that pay higher yields than the greenback.
The euro recouped some earlier gains after data showed a steeper-than-expected drop in German industrial output.
The dollar index, a measure of the greenback against a basket of major currencies, fell to 79.751, down from 80.961 in North American trading Monday afternoon.
The euro traded at $1.4089, up from $1.3883 Monday.
The dollar registered strong gains last week, jumping after U.S. non-farm payrolls showed a smaller-than-expected loss of jobs during May. U.S. Treasury yields jumped, particularly at the short end, on increasing bets that the Federal Reserve could begin to raise its official interest rate from near zero by the end of the year.
Dollar bears argue that the greenback’s recent jump was largely a rebound from technically oversold levels and that fundamentals will favor a return to weakness in the U.S. currency in the near term.
The block of macroeconomic statistics, collected by FBS analysts:
1. Germany - CPI. There were no revisions to headline inflation in May. The final data still have the CPI declining 0.1 percent on the month to show no change on the year, down from an annual rate of 0.7 percent in April.
2. Great Britain - Industrial Production. For once, the industrial sector exceeded expectations in April when output rose 0.3 percent on the month. Moreover, the originally reported 0.6 percent fall in March was halved.
Even so, the increase still left a 3.2 percent drop in production over the latest 3-month period while in the year to April alone, activity was down 12.3 percent.
3. Great Britain - Merchandise Trade. The merchandise trade gap widened out by a larger than expected Stg0.5B to Stg7.0B in April. The deterioration reflected a 2.6 percent monthly rise in imports that more than offset a 0.6 percent increase in exports. The underlying trade deficit performed in much the same fashion, posting an extra Stg0.7B of red ink to reach Stg6.6B as import growth outstripped exports.
4. United States - International Trade. The U.S. international trade gap in March widened to $27.6 billion from $26.1 billion deficit the month before. But the widening was not due to a rise in imports but due to exports dropping a sharp 2.4 percent. Meanwhile, imports slipped 1.0 percent. Oil imports did rise but were offset by other imports falling. The March report paints a picture of contracting demand worldwide. Looking ahead, we may say a widening in the April gap due to higher oil prices boosting overall imports. But there is a good chance that we’ll see a further deterioration in both exports and nonoil imports.
5. United States - Treasury Budget. The U.S. Treasury monthly budget report posted a record $20.9 billion deficit in April, a month that since 1983 (not long after the end of the 1982 recession) has seen nothing but budget surpluses.

Fundamental analysis.
On May, 4rd EURUSD holds steady near the previous levels. The European Central Bank, the Bank of England and the Bank of Canada left key rates at the same level. The European Central Bank, which sets interest rates for the 16-nation euro zone, held its key rate at 1% and said it will launch a €60 billion program to buy low-risk bonds in July. Canada’s central bank, meanwhile, left its key rate on hold at a record low of 0.25%. The Bank of England also kept its key rate on hold at 0.5%.
ECB President Jean-Claude Trichet, speaking at a news conference following the central bank’s decision, forecast the pace of the bloc’s sharp slowdown will ease this year. Mr. Trichet called the current 1% policy-rate level “appropriate.”
Today the following block of macroeconomic statistics is expected:
1/ Britain Producer Output Price Index for May
2/ Britain Producer Input Price Index for May
3/ Employment index in Canada for May
4/ Unemployment index in Canada for May (previous level – 8,0%, forecast – 8,2%).
5/ Employment Situation in the USA for May. Nonfarm payroll employment fell a very steep 539,000 in April, following a 699,000 plunge in March. The good news was the contraction in jobs eased somewhat. The big question for the May employment report is whether the shrinkage in losses will continue. A second slowing in a row in payroll layoffs will be a boost to equities. On the wage front, average hourly earnings were very weak in April, rising only 0.1 percent and May’s number likely will be sluggish, too. Turning to the household survey, the unemployment rate jumped 4 tenths to 8.9 percent in April. If this rate doesn’t ratchet upward again in May, it will be a big surprise as it is hard to find an economist not calling for further increases in the unemployment rate for some time.
6/ US Consumer Credit index for April (previous level – $-11.1 B, forecast – $-7.0 B)
FBS analysts predict that the euro will continue to become stronger relatively to dollar. It is connected, first of all, with possible acceleration of inflation rates. State budget huge deficiency is threat of US financial stability.

Fundamental analysis.
On May, 3rd the dollar has a little won back the falling relatively to euro. EUR/USD has decreased by 1%. Investors, against negative macrostatistics, left highly remunerative currencies, preferring the American dollar and US treasuries. First, US Factory Orders index in April has grown only by 0,7%, instead of expected 1,1%. Secondly, ISM non-manufacturing index in May has reached 44,0 in comparison with 43,7 in April and contrary to expectations of 45,0. This indicator is above 50 throughout eight months on end, specifying economic activity reduction. Thirdly, the number of workplaces in the American companies in April has decreased by 545 thousand, according to report of ADP Employer Services. Fourthly, against the bad statistical data almost all share platforms of the world have decreased.
Today all attention is concentrated on European Central Bank session on which the decision about the key interest rate level will be made. The Bank of England and the Bank of Canada will also make decisions about key interest rates. Performances of the Federal Reserve System chairman Ben Bernanke and ECB chairman Jean-Claude Trichet are planned for today.
Today the following block of macroeconomic statistics is expected:
1/ Retail sales in the Eurozone for April (previous value - -0,6%, forecast - +0,2%).
2/ Jobless Claims in USA for week (previous value – 623H, forecast – 620H).
However, analysts predict that the euro will continue to become stronger relatively to dollar. It is connected, first of all, with possible acceleration of inflation rates. State budget huge deficiency is threat of US financial stability.

Fundamental analysis.
Yesterday, EUR/USD has tested $1,4245 level that is maximum level from the beginning of year.
Highly remunerative currencies, including euro, have been supported by positive news from China. So, the industrial production index of China in May remained above 50 points indicating economic activity increase. Industrial production indexes of the Eurozone and Great Britain in May remained below 50 points but dynamics of their change was positive and has surpassed analysts’ expectations.
Industrial index ISM (USA) has risen to level 42,8 from 40,1 in April. However in the USA there is a problem of a huge public debt which puts pressure upon dollar.
Nevertheless, in view of EUR/USD strong growth which in May has grown by 6,7 % (from the beginning of March euro has risen by 12%!), analysts of the largest European banks (Deutsche Bank, UBS and Barclays Capital) recommend to sell euro. FBS experts don’t exclude that within three months euro can fall to $1,30 level.
Pressure upon euro can amplify on the threshold of ECB session on which the destiny of the key interest rate will dare. Rememeber that ECB does not exclude interest rate decrease below 1%. It will lead to euro exchange rate drop. ECB session will take place on June, 4th.
Today the following block of macroeconomic statistics is expected:
1/ Unemployment rate in the Eurozone for April (previous value – 8,9%, forecast – 9,1%).
2/ Pending Home Sales Index in USA for April.

Yesterday, on May, 27th, the American dollar has added 1,1 % relative to euro.
In comments of ECB representatives it was marked about possibility of the further key interest rate decrease below current level - 1 %. It became the main reason of euro drop. The following ECB session is planned for June, 4th, 2009.
Dollar growth has been caused by following reasons:
1/ The international rating agency Moody’s has confirmed a rating of the USA at level AAA.
2/ Good results in auctions for placing 2-year, 5-year and 7-year Treasury notes.
3/ According to interrogation of National Association of Business Economists, the majority of market participants expect economic recession end in 2009.
4/ Home sales index in April have grown by 2,9 % (4,68 million), the statistics has appeared better than expectations of analysts.
Today, on May, 28th, the euro was supported by the Germany unemployment report according to which the rate of unemployment in May was 8,2% that was above expectations by 0,3 %. Besides, Eurozone index of economic confidence has reached 69,3 points in May against 67,2 points in April.
On May, 28th in the USA, the data for durable goods orders, jobless claims, new home sales will be published. According to forecasts, the sales volume in the primary market in April has increased by 1,1 % to 360 thousand against 356 thousand month before, and the volume of durable goods orders has grown by 0,5 % after decrease by 0,8 % month before.
Meanwhile, fears, concerning possibility of US inflation sharp jump which can lead to considerable dollar decrease, continue to sound. Known American investor Mark Faber has come out with the assumption that the United States will face a hyperinflation.
Experts of US Federal Reserve System don’t exclude increase of inflationary pressure. The President of Federal Reserve Bank of Philadelphia, Charles Plosser, has told that in 2011 inflation can rise to 2,5%, having exceeded the target reference point of 2,0%. In this case FRS should lift rates and to reduce monetary base, and, according to Plosser, the American economy isn’t ready for this.

Fundamental analysis.
Last month the dollar has strongly fallen in price concerning a basket of six basic world currencies such as euro, pound sterling, yen, the Swiss franc, the Canadian dollar and the Swedish crone. So, for last month EUR/USD has grown up by 8 % and has reached $1,40 level.
However on May, 25-26th the dollar has a little strengthened the positions due to negative fundamental news from Europe together with a technical picture of price movement.
Some reasons have affected euro easing.
There was not so positive data from German institute IFO. The international rating agency Moody’s Investors Service has lowered forecasts of two Bulgarian banks ratings. Daily Telegraph has published the information about possibility of increase in Deutsche Bank bad debts volume. Estimated debts are 200 billion euro, and the volume of write-offs can reach 816 billion euro that exceeds the general reserves of German financial institutions twice.
On May, 26th level of Germany gross national product for the first quarter of 2009 is published. For the first three months of this year the German economy was reduced by 3,8 % in comparison with IV quarter of 2008 and by 6,9 % against I quarter of 2008, as well as analysts expected. The index of consumer confidence GfK for June remains at 2,5 the fourth month successively.
On Tuesday the data of prices for the inhabited real estate in USA are expected. It is supposed that rates of prices reduction in March were slowed down again, having made 18,4 % against 18,6 % in February.
On Tuesday the auction of 2-year Treasury note ($40 billion), on Wednesday - 5-year Treasury note ($35 billion), on Thursday - 7-year Treasury note ($26 billion) are planned. Auctions will reflect the American dollar appeal to investors against speculations about the USA rating decrease.

The pair has decreased by 1,1 % on Wednesday. Falling principal cause became applications of the US Federal reserve for possible increase in volume of the repayment of securities program. Also, it is expected that American economy reduction will be more significant than it was supposed in January. Unemployment will probably grow to 9 % and will remain at this level till the 2010. FRS expects decrease in American gross national product by 1,3-2%, instead of earlier declared 0,5-1,3%.
On May, 20th Dow Jones has lost 0,6%. Bank sector which have not reacted to the stresses-tests positive estimations sounded on Wednesday by Timothy Geithner, have appeared under pressure. Alan Grinspen considers that American banks can face necessity of large capital attraction. Besides, according to FRS ex-head, serious problems in the US mortgage sector will proceed until the houses prices are stabilised.
Today we will see a lot of the economic statistics. Retail sales data is published in Great Britain, and analysts expect growth of retails in April to 0,5 % in monthly expression and 2,4 % in annual expression after increase in March by 0,3 % and 1,5 % accordingly. Following data from the USA is expected: Jobless Claims, Leading Indicators, Philadelphia Fed Survey. Analysts assume that Leading Indicators index, characterising development of the American economy the next three-six months, in April has grown by 0,8 % after decrease by 0,3 % month before, and industrial index Federal reserve Bank of Philadelphia in May has risen up to -18,0 in comparison with - 24,4 in April. Jobless Claims level for the week ended 05/16/2009 has decreased to 630 thousand from 637 thousand week before.