Buying yesterday lead to a sharp increase in all markets, and created a surge in the market. This was mostly driven by the market being oversold, and the dollar showing some weakness. Most of that jump has eroded this morning, as the market drops off to make up for yesterday’s rally.
Reuter’s researchers and forecasters reported more gloomy economic data emerging from China to strengthen concern amongst traders who had begun to increase their long positions on speculation that the market was at the bottom. Today’s most reported news is the Chinese decision to devalue its currency by nearly 2%. This is the biggest single day fall of the yuan since 1994. The move will make imports more expensive sparking fears of a slowing of oil imports by traders and hurting commodity prices.
Reuters also reports that U.S. oil production from the largest shale areas are forecast to decline for a fifth consecutive month in September, data from the U.S. Energy Information Administration showed on Monday. Production from those three plays is expected to drop by nearly 75,000 barrels per day in September from August, the EIA said in its monthly drilling productivity report. Nonetheless, OPEC production is reaching record highs so this is not enough to push the market up. There is news from Saudi Arabia trimming of supply, so this could help prices find a floor.
Lastly, BP announced that it was forced to shut the largest (250,000 bpd) crude unit at its 420,000 bpd Whiting, IN refinery and gave no estimate for it coming back on line. This has Chicago gas rallying +20 cents and ULSD +5-10 cents.