PATIENT STILL CRITICAL

Prices came under pressure again yesterday as the sentiment pendulum swung back towards pessimism registering the disappointment with recent economic data in the US and China. Crude fell below $80 bbl as business confidence registered a low not seen in four months.

Stockpile reports tomorrow are expected to show swelling gasoline reserves at a time when they should be depleted. .Poor gasoline demand is a visible indicator of the lack of a real recovery. China's crude imports slumped 15% in July from June showing efforts to apply the brakes are having the desired effect there.

Federal Reserve policy makers meet today to decide on changes in monetary policy. No matter the outcome, it will be hard to disguise their growing concern about gathering deflationary clouds and this has already weighed on overnight markets.

The productivity of U.S. workers unexpectedly fell in the second quarter also showing the economy lost momentum as slower growth in output will prompt companies to continue to focus on aggressive appoaches to cost cutting and postpone new hiring. these are hardly conditions under which energy demand will grow, but the market still exhibits considerable inherent strength.

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