Crude oil fell today as a result of speculations that the slowing performance of the European and the U.S. economies will affect negatively demand on oil, as the futures fell by 0.6% after the EIA report which showed that US crude inventories rose in the last week indicating that demand on oil from the world’s largest oil consumer may falter.
Light sweet crude oil for September opened today at $87.42 a barrel recording the intraday high at $87.51 a barrel and a low of $86.69 a barrel and is currently trading around $86.85 a barrel.
On the other hand, the USDIX which measures the dollar’s performance against other six major currencies advanced today giving the oil another reasons to fall as it opened at 73.79 recording the highest at 74.00 and the lowest at 73.66 and is currently trading around 73.87.
Asian stocks fell for the first time in four day as the MSCI Asia Pacific Index slid 0.7% and worries about the U.S. economy and the European region still exist and are expected to continue with the slowing pace until the end of the year especially that the vision is still not clear in both entities so far.
The EIA report which was released yesterday showed that the U.S commercial crude oil inventories increased by 4.2 million barrels from the previous week. At 354.0 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 3.5 million barrels last week and are upper limit of the average range.
This report offset the positive impact of the API report that showed that U.S. gasoline stockpiles slipped sharply by 5.4 million barrels in the week ended August 12.
Concerns about the debt crisis have weighed on oil markets in recent weeks, adding to concerns over the weak U.S. economic data that could hit fuel demand, especially after the meeting between French and German leaders which resulted in nothing and didn’t come with any concrete measures to try and find a way out of Europe's sovereign debt problems, as they proposed a closer joint governance of economic policy and a tax on financial transactions, but did not propose selling euro zone bonds or increasing the euro zone bailout fund.
More volatility is expected today with the eyes on the fragile sentiment and more fundamentals from the U.S. as the reports may show U.S. jobless claims increased last week and manufacturing in the Philadelphia region slowed this month confirming the slow pace of recovery.