Crude Oil Falls More Than $2 as Dollar Rebounds, Demand Slips: That oil will fall was mentioned to the Premium Group members in the last Sunday report: My inputs on the Sunday Report sent to the Premium (Paid) Group is placed below: Crude oil dropped more than $2 a barrel for the first time in almost two months as the dollar rebounded against the euro, reducing the appeal of commodities as an investment and on speculation oil consumption will fall. Crude-oil consumption usually eases in October as refineries make repairs and upgrade units before winter. ``The dollar is finally rebounding, which is weighing on the commodities,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``The complaints by the Europeans about the dollar's weakness signal that we've found a bottom, at least for the short term.'' Crude oil for November delivery fell $2.20, or 2.7 percent, to settle at $79.02 a barrel at 2:45 p.m. on the New York Mercantile Exchange, the lowest close since Sept. 11. It was the biggest one-day decline since Aug. 16. The contract touched $78.35 during the session, the lowest intraday price since Sept. 17. Futures touched $83.90 a barrel on Sept. 20, the highest since the contract was introduced in 1983. The dollar rose 0.7 percent to $1.4038 per euro at 1:27 p.m. in New York. It has climbed 1.7 percent since falling to an all- time low of $1.4283 on Oct. 1. Members of the Organization of Petroleum Exporting Countries have said a falling dollar justified higher prices because oil- producing countries sell crude oil in dollars and often buy goods in euros. In U.S. dollars, West Texas Intermediate, the New York- traded crude-oil benchmark, is up 29 percent so far this year. Oil is up 21 percent in euros, 24 percent in British pounds and 28 percent in yen. Bearish Sentiment ``Growing bearish sentiment will soon start driving prices lower,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``The dollar is recovering, there's been no supportive weather and we'll probably get another inventory increase this week.'' U.S. crude-oil supplies rose in the past two weekly reports by the Energy Department. Inventories climbed 1.5 million barrels in the week ended Oct. 5, according to the median of responses by 11 analysts surveyed by Bloomberg News. The department is scheduled to release its weekly report on inventories on Oct. 11 at 10:30 a.m. in Washington, a day later than usual because of today's Columbus Day holiday. Crude oil will fall this week, a Bloomberg News survey on Oct. 5 showed. Twenty-four of 32 analysts surveyed, or 75 percent, said prices will decline, the most bearish response since the survey was introduced in April 2004. Weather Peg ``Crude prices in the coming months will be pegged to the weather,'' Jean Louis Schilanski, a director at the Union of French Petroleum Industries, said in an interview in Paris. ``The question the market is asking is whether this winter will be mild or cold and that is what will determine the price of crude.'' The threat of hurricanes disrupting production eases in October because fewer storms typically form. The Atlantic hurricane season began June 1 and ends Nov. 30. The peak of the season is typically between mid-August and mid-October. Four hurricanes have formed this season, according to the U.S. National Hurricane Center in Miami. Brent crude oil for November settlement fell $2.32, or 2.9 percent, to $76.58 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since Sept. 14.

Excerpts from the last Sunday's Report sent to Premium (Paid) Group Members:

The markets as expected continued its onward march in the last week, amidst alternate bouts of profits booking at higher levels. Traders and speculators were seen buying auto, banking, realty, capital goods, telecom, IT, power, oil & gas counters. FIIs were net buyers in the cash market but were net sellers in the derivatives segment. Domestic institutional investors remained net sellers during the course of the week using higher levels to fill their kitty. In the global front, Asian stocks gained for a third week and reached a record after former U.S. Federal Reserve Chairman Alan Greenspan and Citigroup Inc. suggested that losses in credit markets will abate. Mizuho Financial Group Inc. and National Australia Bank Ltd. led a rally by financial shares after Greenspan said lenders are displaying a willingness to take on greater risk and Citigroup forecast earnings will improve this quarter. Nikko Cordial Corp., Japan's third-biggest brokerage, surged after Citigroup Inc. said it will buy the remaining shares it doesn't own in the company. Industrial & Commercial Bank of China Ltd., the world's largest bank by market value advanced 9.9 percent to HK$5.99 in Hong Kong. The Philippine peso rose to the highest in 10 weeks against the dollar on speculation that the central bank prefers a strengthening currency. The peso was the best performing of the 10 most-active Asian currencies on last Friday, advancing for a second day since central bank Governor Amando Tetangco said the ``continued strength of the peso provides a buffer against rising commodity prices.'' ``The central bank implied that the peso will remain strong as it helps contain inflationary pressures from oil and other commodities,'' said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp. in Manila. Malaysia's ringgit rose for a second day on speculation overseas investors will buy local equities. The ringgit recouped a weekly decline as the Kuala Lumpur Composite Index had for the best week since the five days to Aug. 24. A government report on industrial production next week will probably show domestic demand is supporting economic growth. ``Risk appetite will return and the market will sell back the dollar in favor of Asian currencies,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``Growth prospects are still OK.'' The currency rose to 3.4045 against the dollar from 3.4102 late yesterday, according to data compiled by a reputed new agency. Indonesia's Rupiah strengthened, ending three days of losses, on speculation the central bank will defer cutting interest rates next week to help temper inflation. The rupiah rose 0.3 percent to 9,101 against the dollar, completing a fourth weekly gain, according to data compiled by Bloomberg. Bank Indonesia will keep the rate used as reference for bill sales at 8.25 percent on Oct. 8, according to 16 of 17 economists surveyed by Bloomberg News. The Taiwan dollar gained for a third week, adding 0.2 percent to NT$32.597 against the U.S. currency, according to Taipei Forex Inc. A report yesterday showed Taiwan's inflation accelerated to a two-year high in September. Consumer prices advanced 3.08 percent from a year earlier, the state statistics bureau said in Taipei. That was more than the 2.06 percent median estimate in a News Agency survey of 18 economists. Prices rose a revised 1.6 percent in August. Elsewhere, the Singapore dollar rose 0.6 percent in the week, the Thai baht posted a weekly gain of 0.1 percent and the Vietnam dong was little changed in the week at 16,083.5. China's onshore markets were closed this week for national holidays. The Morgan Stanley Capital International Asia-Pacific Index added 1.7 percent to 166.06 after reaching a record on Oct. 3, extending a two-week, 7.1 percent rally. Financial shares were the biggest gainers among the measure's 10 industry groups, jumping 4.2 percent. Japan's Nikkei 225 Stock Average added 1.7 percent this week. Shares also rose as the Bank of Japan's quarterly Tankan report showed business confidence held near a two-year high. Hong Kong's Hang Seng Index rose to a record on 2nd October, 2007, before posting its biggest two-day loss in seven weeks on concern the recent surge had overvalued the prospects for company earnings. The measure ended the week 2.5 percent higher. All others regional markets advanced, with benchmarks in Australia, South Korea, Singapore, Indonesia and India climbing to new highs. The U.S. stocks rose for a fourth straight week, sending the Standard & Poor's 500 Index to a record, after employment growth eased concern that mortgage losses will cause a recession. Fannie Mae and Morgan Stanley led banks, brokerages and other financial firms in the S&P 500 to their biggest rally since March 2003. Homebuilders surged the most since November 2000 after Citi Investment Research said their shares are cheap. Thus what I said aftermath of Rakesh Jhunjhunwala’s outbust on the US Housing market came to be true. Alcoa Inc. will become the first Dow average member to report third-quarter results on 9th October, 2007. Analysts expect S&P 500 companies to post 0.7 percent earnings growth for the period, according to the average estimate in a survey conducted by a reputed news agency. Alcoa, the world's second-largest aluminum maker, lost 0.8 percent last week to $38.79. Crude oil fell after a report showed that U.S. employers added more jobs in September than economists had anticipated, reducing the likelihood of a Federal Reserve interest-rate cut to sustain economic growth. Crude oil surged on Sept. 18, when the Federal Reserve cut its benchmark interest rate by half a percentage point. New York oil reached records for seven straight days through 20th September, 2007 on the falling dollar, supply declines and storms. Crude oil may fall through till 12th October, 2007, a News survey showed. Twenty-four of 32 analysts surveyed, or 75 percent, said oil prices will decline, the most bearish response since the survey was introduced in April 2004. Two, or 6.3 percent, said prices will rise and six said there will be little change. Analysts looking for a price decline said that U.S. crude- oil stockpiles may rise because of reduced demand at refineries performing maintenance and increased OPEC output. The Organization of Petroleum Exporting Countries, which is responsible for 40 percent of global oil output, increased production by 0.9 percent to 30.615 million barrels a day in September. The group agreed at a 11th September, 2007 meeting to increase production by 500,000 barrels a day beginning from !st November, 2007to bolster the global economy. Brent crude oil for November settlement fell 7 cents to $78.90 a barrel on the London-based ICE Futures Europe exchange. The dollar posted the biggest weekly gains against the yen in more than a year, and the euro since August, on signs the economy is weathering the housing slump. The U.S. currency had its first weekly gain against the euro. The dollar earlier touched $1.4042, the highest level since 21st September, 2007. The dollar rose 1.8 percent this week to 116.97 yen, the biggest increase since June 2006. ``People overstated the downside risk to the U.S. economy, and we're seeing the adjustment to the dollar,'' said Robert Sinche, head of global currency strategy in New York at Bank of America Corp. Interest-rate futures yesterday suggested a 48 percent chance the Federal Reserve will cut the target rate for overnight lending between banks a quarter-percentage point on 31st October, 2007, down from 84 percent a week ago. The extra yield investors demand to own emerging-market dollar bonds instead of U.S. Treasuries narrowed yesterday to the smallest since July. Traders reduced bets that the Federal Reserve would cut borrowing costs this month after the U.S. government revised employment data for August to an unexpected increase. Finance ministers meeting in Luxembourg on 8th October, 2007, may discuss the possibility of a sale of euros by the European Central Bank. Since commodities are priced in dollars, so when the currency falls commodities rise to compensate. Thus real assets such as commodities like gold are more appealing when the dollar weakens. Hence in the tomorrow (Monday) some weakness could be seen the metal prices especially the precious metals. Sell Tata Steel, SAIL, Bhusan Steel, Uttam Galva etc. In the domestic front the INR continued to appreciate against the US dollar in the deluge of FII inflows. Rising concerns and rumours of the RBI increasing the CRR added to the volatility on the bourses and triggered a sharp intra-day sell-off. Fund flows, news flows about the political brinkmanship of the Left and earnings season, which will start from 10th October, would influence the market sentiment; especially considering the case that the IT giants Infosys Technologies Ltd would declare the results on 11th October. Thus it would be a make or break for IT stocks. In the meanwhile, the markets would continue to take cues from global markets, crude oil prices and of course the rupee-dollar equation. Technically speaking, the market sentiment remains positive but cautious. The market oscillators on the daily and weekly charts continue to remain in the overbought zone. Since, the markets are expected to remain volatile and hence some profit booking is a must at regular intervals or when a scrip rises 40%--50% from the recommended price. On the upside, if the Sensex manages to sustain above the 17500 levels, it is likely to test the 17960 followed by the 18000 level. The Sensex has support at the 17500 followed by the 17300 level. If the Nifty manages to sustain above the 5150 level, it is likely to test the 5250 followed by the 5300 level. The 5150 level followed by the 5075 level are important support levels for the Nifty. The weekly trend is up after the weekly closing on 31st August, 2007 of 15318. The weekly trend can turn down if the Friday weekly close is below 16808. The Sensex has attained the first target of 17957 and it is just a matter of time when the remaining targets of 19248-21337 are attained. Last week trading was very restricted and was concentrated to a select few scrips. Even the advance-decline ratio was stretched without showing any specific positive bias vis-à-vis the rise in the Sensex stocks. In the A Group, 119 stocks rose while 101 declined. In the B1 & B2, 526 stocks rose while 983 declined. In the small-caps, 466 stocks rose while 611 declined. These statistics clearly indicate that the rise was backed not only participation of the retail investors who had a left out attitude but also fuelled by heavy FII inflows on account of the recent cut in interest rates in the USA. [With inputs from various sources]