Will Crude Continue To Slip?

  • February 20, 2003
  • Vincent Mao

Concerns about looming
war and economic data suggesting inflation took stocks and the dollar
down, while bonds relished the news. Meanwhile, crude oil backed off after a six-day
run amid mixed supply reports, and gold rose once again after a recent tumble. 

Stock index futures turned lower for the second
day as threats of war continue to weigh on the market. Dow, S&P, and NDX
futures also head lower as a barrage of economic data revealed rising inflation
at the wholesale level, a weakening job market, a slowdown in regional
manufacturing, and a record trade deficit. At the close, the March Dow
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NDX
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The dollar also declined against the euro and yen
as the trade deficit in December rose to a record $44.2 billion. The March dollar
index fell 0.52 to 99.65. 

Treasury futures feasted on today’s economic
news. The January PPI rose 1.6% or more than three times the estimate of a 0.5%
gain. This was the biggest increase in over 13 years and suggest higher prices
could be in the works for consumers.  Most of the gain in the PPI was due
to the surge in energy prices. The labor market could once again be weakening as
jobless claims rose by 21,000 to a seven-week high of 402,00 last week.
Manufacturing in the Philadelphia region grew slowly as the Philly Fed index
dropped to 2.3 from 11.2 in January. The trade deficit in December rose to a
record $44.2 from $40 billion in November. The March 10-year contract
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contract
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Crude oil snapped a six-day winning streak as the
Department of Energy and American (API) Petroleum Institute reported different
stories on crude. The Department of Energy reported that the crude oil supplies
rose by 3.1 million barrels last week while the API reported a decline of 3.3
million barrels. However, both agencies reported that overall crude supplies are
still hovering at a 27-year low of around 270 million barrels. Today also marked
the final day of trading for March crude
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April crude is now the front month contract, the April contract
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0.86 to 34.74. Crude is right above first level support at 34.50. 

April gold continued to head higher after
bouncing off support near the 342 level. Gold is starting to regain some of its
luster after an Iraqi news agency reported that Saddam Hussein met with top
aides and commanders in preparation for possible war. April gold 
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