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AnalysisOil prices extend their plummet as investors still have their attention set on the EIA report that was released Wednesday showing that in the U.S. economy, the biggest oil consumer, oil stockpiles unexpectedly increased and this gave clear evidence that demand on oil was still dampened as a result of the recession. As investors feared oil prices will resume its spiral downwards, they continued to flee oil markets weighing heavily on prices. The contract shed $3.08 closing at $65.89 while recording a high of $68.77 per barrel and a low of $65.60 per barrel.

 

The U.S. stocks ended the day yesterday in the red zone as a result of the unexpected decline in existing home sales which right away aroused pessimism in the markets that the housing sector is not yet bottoming out. Also in the markets fears approached as the Feds are going to pull back some of the stimulus package that was aimed at supporting financial markets. As a result of these reasons we witnessed that equity markets took a hit, turning to oil shares we see that Exxon Mobil dipped 0.07 points or 0.10% to $68.93, ConocoPhillips declined 0.77 points or 1.68% to $45.06 while Chevron Corp. slipped 0.66 points or 0.92% to $70.71.

 

The EIA report was released Wednesday showing that the U.S. commercial crude oil inventories increased by 2.8 million barrels from the previous week. At 335.6 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 5.4 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 3.0 million barrels, and are above the upper boundary of the average range for this time of year.

 

Today, oil prices ease their decline as they begin to slightly rise on anticipations that the two day plunge regarding crippled oil demand was too much and once again enter oil markets as they seek potential in profits. Although they enter oil markets they are still aware that the global recession will weigh on oil prices in the long run and as we have been witnessing declining oil prices, supports our point of view of stating that oil prices are still negatively effected by the ongoing global recession. The markets today opened at $65.92 while recording a high of $66.70 per barrel and a low of $65.81 per barrel.