As the dollar world turns. Oil prices are heading lower ahead of a big week in global economic matters. Not only will the G-20 meet in Pittsburg to try to assess what went wrong with the global economy and try to fix it, but also the Fed meets to decide whether or not it's time to remove some of the props that have been lifting the global markets. And the question for oil traders is whether or not the dollar can find love and happiness in a world gone mad.
Once again the dollar is the key driver moving the crude market. Traders are covering the dollar on fear that perhaps the G-20 may do something to support the dollar or that the Fed may slow down its purchases of treasuries. Of course the dollar has been oversold and it's possible that we are getting to the point where the carry trade has gotten, well, carried away. The truth is that at some point someday soon the dollar is going to bottom as data suggests that the economy is getting better. If the Fed and the globe want to keep stimulating the economy, they will have to take steps to stimulate the global economy!
Good green news this morning! There has been a drop in green house gas emissions according to the International Energy Agency! Maybe that's why this summer has been so cold. But sadly the reality is really bad news. Emissions are down due to the recession. Maybe it's not good news after all.
The global recession is still taking its toll on the refining industry. Barbara Powell at Bloomberg reports that Valero Energy Corp., the largest U.S. refiner, said it delayed until 2012 the expansion of a crude unit and coker at its refinery in St. Charles, Louisiana, due to poor refining margins. "Valero has postponed several capital projects in order to free up cash on our balance sheet," Valero spokesman Bill Day said in an e-mail. The project would expand crude processing capacity by 45,000 barrels a day and coking capacity by 10,000 barrels a day. The expansion, estimated to cost $250 million, was scheduled for early 2010. The company has postponed $1.7 billion in projects until 2012 at St. Charles, its third-largest refinery. Delayed projects include an upgrade of a catalytic cracker and addition of a hydrocracker at the refinery, which has the capacity to process 250,000 barrels a day, according to data compiled by Bloomberg.
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