NEW PLAYBOOK NEEDED

Crude oil posted $78.15 yesterday before retreating to virtually unchanged as the Federal Reserve revealed its less than stellar assessment of the domestic economy. Disappointing retail sales also weighed on prices. In the early going overnight prices were further pressured by China's revelation that GDP growth eased to +10.3% in Q2 '10, suggesting tightening had been effective.

The market was breifly bouyed by a -5.06MM bbl drop in crude stockpiles, and a surge in the utilization rate to 90.5% last week, it was offset by rising levels at Cushing. Gasoline and distillate stockpile surged more than expected, as well.

The minutes from the June FOMC meeting showed the central bank  downgraded its growth and inflation outlook for 2010 and 2011 while unemployment rate forecasts were revised up. Financial markets were hurt as a result, taking oil prices down.

In upbeat wording, the Fed noted the adjustments were 'relatively modest' and do not warrant 'policy accommodation beyond that already in place'. That said, the Fed would consider whether 'further policy stimulus might become appropriate if the outlook were to worsen appreciably'. In other words, the "green shoots" never bore fruit.

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