Central Valley Cooperative

Energy – lower – take some risk premium out – demand remains very soft – quiet in the U.S. , look overseas for news – EU and Iran. The energy complex trade is trading mixed to lower as the dollar finally rallies. February crude oil is trading $0.89 per barrel lower to $99.50 compared to $101.63 yesterday at this time. The range bound, consolidating energy complex continues to fade sideways to lower this morning. We are again below the $100.00 mark as traders take profits ahead of the weekend. The euro is losing value as the U.S. dollar gains. Iran may be softening and possible ready to enter negotiations on their nuclear power status. Saudi Arabia announced they are prepared to balance the oil market with their excess capacity of 2.5 mbpd. Yesterday they stated a desire to remain near the $100.00 price level for oil. The EU may target to vote next week on the embargo, but they appear split on their decision at this time. Crude oil stocks dropped yesterday from lower imports. Fundamentals are very weak as implied 4 week demand for oil fell to a 15 year low and gasoline demand fell to an 11 year low. This occurs as natural gas breaks to 10 year lows and is priced cheaper than coal on a BTU comparison. The lack of demand in the U.S. is stunning the trade as Europe is certain to be losing demand at the same time as they are in recession. The Greeks continue debt restructuring talks with little progress.