Crude oil is lightly increasing after it fell yesterday affected by yesterday’s EIA report which showed that crude oil inventories rose last week as the first release of crude stocks in the country surprisingly boosted inventories, in addition to the negotiations between U.S. leaders to raise the government’s debt ceiling before the deadline affecting oil prices as the U.S. is the world’s largest oil consumer.
Light sweet crude oil opened today at $97.18 a barrel recording the intraday high at $97.40 a barrel and a low of $96.50 a barrel and is currently trading around $97.36 a barrel.
Also a strengthening dollar may pressure oil further to the downside, as the dollar rebounded today after falling to the lowest levels. The USDIX opened today at 74.06 recording the highest at 74.20 and the lowest at 74.02 and is currently trading around 74.08.
The Energy Information Administration said yesterday that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.3 million barrels from the previous week. Total motor gasoline inventories increased by 1.0 million barrels last week and are in the upper limit of the average range, roughly the amount the U.S. released from its Strategic Petroleum Reserve.
The International Energy Agency said last month it would release 60 million barrels half of which is from the U.S. in order to lower prices and make up for the shut down of Libyan oil since February.
In the United States, lawmakers have only less than one week to raise the debt ceiling before the August 02 deadline, and the Congress is facing more uncertainty as Republican leaders delay action on a plan to raise the ceiling, narrowing the opportunities for a deal to avoid default, so this failure by U.S. leaders to agree to lift the government's debt limit also weighed on crude prices.
Democrats plan to raise the debt limit by $2.7 trillion to cover the country's need of borrowing till November 2012, while Republicans suggested a two-step plan to raise the limit, which was met by strong refusal from the U.S. President who warned that this could result in negative consequences on the U.S. economy if the ceiling is not raised.
Eric Cantor, a House Representative and a Virginia Republican, said the Republicans' plan supposed to be voted today but it was delayed again, and President Barak Obama’s Office of Management and Budget said it “strongly opposes” the measure and would recommend a veto if it was passed by Congress.