On New Year's Eve, crude prices jumped above $44 a barrel by almost 14% since geopolitical tensions persisted as the conflict between Israel and Palestine enhanced fears that oil supplies from the Middle East, which as we know is one of the largest black gold areas. Furthermore, the EIA report showed that the U.S fuel stockpiles rose less than expected. As a result, crude prices closed at $44.60 a barrel recording a high of $45.54 per barrel and a low of $36.94 witnessing consequently a considerable $5.57 gain in the oil contract.
Today, crude prices fell again as the global crisis is endlessly pressuring the black gold prices to the downside, knowing that this predicament is continuously deepening is causing a weakened level of production and therefore a poorer demand on energy. In point of fact, this recessional phase is the worse since World War II, causing crude prices so far to open at $43.72 a barrel recording a high of $43.72 per barrel and a low of $42.14 per barrel.
The EIA report was released this Wednesday showing that U.S. commercial crude oil inventories increased 0.5 million barrels from the previous week. At 318.7 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.8 million barrels last week, and are in the lower half of the average range. Finished gasoline inventories decreased last week while gasoline blending components inventories increased during this same time. Distillate fuel inventories increased by 0.7 million barrels, and are in the middle of the average range for this time of year
Therefore, the gain in the oil contract on Wednesday was simply momentary as crude prices dropped again to a rational and a more logical level since the worldwide economic downturn depth is constantly deepening as it was already forecasted last year.