|Analysis||Crude oil inclined for the third day on buoyant outlook as economic data released from major economies, especially U.S., is providing documentary evidence that the worst is over which boosted future energy prospects.|
Yesterday, the EIA report was released showing that U.S. stockpiles fell to its lowest level since 9 months. The surge reflects the rise in demand in the world's no. 1 crude consumer. The report came after the American Petroleum Institute which showed a strong upsurge in gasoline and distillate stocks.
The EIA report released on Wednesday showing that U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week. At 332.8 million barrels, U.S. crude oil inventories are above the upper boundary of the average range for this time of year. Total motor gasoline inventories increased by 0.5 million barrels last week, and are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 2.2 million barrels, and are above the upper boundary of the average range for this time of year.
Meanwhile, all signs are signaling that the recession is receding, with the upbeat economic data released day after day, after the stimulus plans introduced by governments worldwide. Consequently, global equities bounced on optimism in markets which enhanced investor's risk appetite. Wall Street closed on gains for the third day yesterday, while the MSCI Asia Pacific Index rose to its highest level in 12 months. The rising equities lifted oil prices above $72 a barrel.
On the other hand, the U.S. dollar is now traded at its lowest level this year versus the European single currency. With the ongoing improvement in economic outlook, the U.S. dollar has been facing a strong downside pressure as a refuge asset. The dollar index, which tracks the dollar movements versus a basket of major currencies, is now at 76.10 compared with the opening at 76.27. The sliding dollar boosted dollar-denominated commodities, especially oil as a hedge against inflation.
Now, oil is traded at $72.37 recording a high of $72.67 and a low of $71.92, whereas the contract yesterday added $1.58 closing at $72.51, while recording a high of $72.56 per barrel and a low of $70.14 per barrel.