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| Analysis | Crude oil fell for the second day on Thursday trading, reaching the lowest level in one month, as the bearish announcements by the Fed Chairman yesterday added to concerns, thereby increasing expectations that the demand on oil would decrease from the world's larges crude consumer. Oil for November delivery is currently trading around $81.80 a barrel after recording a high of $84.98 and a low of $80.24. On Tuesday night, the Fed Chairman, Ben Bernanke, said there are “significant downside risks” to the economic outlook of the U.S. and said the Fed would sell $400 billion of short-term securities and buy an equivalent amount of long-term securities to reinvigorate the economy. Bernanke's announcements were translated negatively by investors, pushing shares to the downside and enhancing demand on the low-yielding assets. The bearish announcements by Bernanke along with the lackluster reports from major economies increased expectations that global recovery is faltering and future demand oil would decline. Today, manufacturing and services data from the euro area showed contraction in the two key sectors, while U.S. jobless claims showed a rise, adding to signs that the sluggish growth pace is counting. Furthermore, the EIA report released on Wednesday showed that the U.S commercial crude oil inventories decreased by 7.3 million barrels from the previous week. Total motor gasoline inventories increased by 3.3 million barrels last week and are upper limit of the average range. Distillate fuel inventories decreased by 0.9 million barrels last week and are in the upper limit of the average range for this time of year. In the FOREX market, the dollar took advantage of the tensions to advance as investors resorted to the greenback as a refuge, adding more pressure on dollar-denominated commodities. The dollar index, which tracks the dollar movements versus a basket of major currencies, edged up to a high of 78.79 compared with the day's opening level of 77.79.
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