Sustained unfavourable economic news coupled with a related global wide petroleum product demand destruction continues to impact crude trading values. As a result, crude has now traded in the $40 per barrel range for much of the past 45 days. Specific market conditions, however, are influencing refined product prices in very different manners. As a result of falling demand and lower than acceptable profit margins, refiners have arbitrarily cut back on gasoline production thus creating, at times, spot market shortages. In addition, seasonal maintenance and re-tooling associated with the conversion to summer grade gasoline production has also impacted supply. The previously reported strong New York Harbour gasoline inventory position appears to be made up of summer grade gasoline which is not suitable for current consumption. The combination of refinery production cutbacks coupled with a recently observed increase in demand for gasoline have generated product shortages, resulting in spot price appreciation as of late. On the other hand, mild weather, robust domestic inventory positions coupled with increased imports have combined to reduce distillate spot market prices.

• The U.S. Labor Department this past Friday released statistics revealing that 598,000 jobs were lost to the U.S. economy in January representing the largest monthly job loss since December 1974. The U.S. unemployment rate now stands at 7.6% the highest in 16 years.
• The International Monetary Fund this week predicted that the world economy would grow this year by only .5%.
• China reported on Monday that some 20 million workers have lost their jobs, while Hong Kong based brokerage CLSA published a survey that indicated that Chinese manufacturing shrank in January for the sixth consecutive month.
• The U.S. National Association of Realtors indicated this week that buyers stepped in to snap up properties at steep discounts in December, especially in Southern and Midwestern states. The seasonally adjusted index of pending sales for pre-owned homes rose 6.3% to 87.7% in the final month of the year.

Algerian oil minister Chakib Kheil told reporters in Washington this week that continued oil prices below $40 per barrel could require further production cuts on the part of OPEC and its members. He indicated that there was at least a 50% chance of additional production cut back announcements at the upcoming March 15th OPEC meeting.