New York (Platts)--4Mar2009

Upward price pressures in the US continued to ease as a result of falling
prices for energy and assorted raw materials, the Federal Reserve Bank said in
the Beige Book, released Wednesday.

The Beige Book is a survey of economic conditions in the US released
eight times a year.

Reports from bank's 12 districts showed that economic conditions
deteriorated further over the past two months.

"Conditions weakened somewhat for agricultural producers and
substantially for extractors of natural resources, with reduced global demand
cited as an underlying determinant in both cases," the Beige Book said.

"Reduced global demand and lower prices for oil have prompted a sharp
cutback in oil extraction activity since last fall, with Dallas (district)
noting an "unprecedented" decline in the domestic rig count that was largely
concentrated in their district," the report added. "Respondents from the
Kansas City district expect oil extraction activity to fall further as the
year proceeds, and Minneapolis noted that natural gas and mining activities
also faltered during the reporting period."

The Dallas Fed reported that demand for oil services and equipment was
shrinking rapidly. The rig count has lost an "unprecedented" 697 rigs since
the September peak and 382 since year-end. Demand for some durable equipment
was down by as much as 90%, the Dallas Fed said.

"Looking ahead, contacts from various districts rate the prospects for
near-term improvement in economic conditions as poor, with a significant
pickup not expected before late 2009 or early 2010," the Beige Book said.

--Linda Rafield, linda_rafield@platts.com