NewsEIA Report
Previous-0.4 million barrels
Forecast-1.5 million barrels
Analysis

Crude oil climbed for the fourth day above $72 a barrel on weaker dollar and U.S. report showing that stockpiles declined last week.

 

Oil extended its gains today as the U.S. dollar continued its slump against majors. The dollar index which tracks the dollar's movements versus a basket of major currencies dipped for the fifth day near its lowest level this year. The index fell 5% this year and 1.4% over the past week, while it is now at 76.88 compared with the opening at 76.99. The U.S dollar is facing more pressure with the ongoing signs of improvement and recovery since it, along with the yen, plays the role of refuge assets. The tumbling dollar increased the appeal of dollar-denominated commodities as a hedge against inflation.

 

By extension, the American Petroleum Institute (API) released its weekly report yesterday showing that U.S. stockpiles slipped 7.22 million barrels, reflecting the improvement in demand. Oil may gain further support after the release of the EIA report later on today. The report is expected to show a decline of 1.5 million barrels. Signs of global recovery is weighing on oil prices and may drag it again above to its 10-month high recorded at the end of August.

 

Another strong support for prices came from stocks which bounced, sending S&P 500 to its highest in 11 month and the MSCI Asia Pacific Index to one-year high. However, oil shares dropped; ConocoPhillips share plunged 0.08 points or 0.17% to 45.75 points; Chevron Corp. share lost 0.10 points or 0.14% to 70.23 points; and Exxon Mobil share slipped 0.03 points or 0.04% to 70.47 points.

 

Moreover, OPEC mentioned that it will keep its output unchanged at 24.845 million barrels per day after it had cut its production last year by 4.2 million barrels to boost prices. It seems that the current prices are satisfying for the oil cartel which expected previously that the price will range between $70 and $80 by the end of the current year.

 

Now, oil is traded at $72.20 recording a high of $72.37 and a low of $71.55, whereas the contract yesterday added $0.21 closing at $71.31, while recording a high of $72.52 per barrel and a low of $70.66 per barrel.