|Analysis||Crude oil prices yesterday surged as a result of the EIA report being released in the U.S. economy showing that gasoline stockpiles declined and this hinted that demand was picking up despite the ongoing recession in the U.S. This certain economy is highly watched by investors since it is world's largest crude consumer so reports or economic data released usually hint signs to how oil prices are going to be shaped. As a result of the decline in gasoline inventories, the contract gained $3.90 as investors entered the markets seeking potential in profits closing at $70.61 while recording a high of $70.72 per barrel and a low of $66.22 per barrel.|
The EIA report was released yesterday showing that the U.S. commercial crude oil inventories increased by 2.8 million barrels from the previous week. At 338.4 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 decreased by 1.6 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 0.3 million barrels, and are above the upper boundary of the average range for this time of year.
The U.S. stock markets ended the day yesterday in the shedding points as a result of the Chicago PMI index showing that after expanding lately started to contract again and this renewed worries in the markets that the U.S. economy is still trying its best to step out of recession. Looking at oil shares we see that Exxon Mobil dipped 0.46 points or 0.66% to $68.61, Chevron Corp fell 0.48 points or 0.67% to $70.43 while ConocoPhillips declined 0.06 points or 0.13% to $45.16.
After prices climbed above $70 per barrel, they eased today as a result of investors locking in on profits as still there are worries in the black gold market that a global economic recovery is taking longer to occur, which means that prices are still pressured from the economic downturn therefore scaring investors from markets. Today the markets opened at $70.40 while recording a high of $70.40 per barrel and a low of $69.83 per barrel.
The volatility in the markets supports the fact that investors are confused about the low of oil prices, yet our opinion is that oil prices in the long run are negatively impacted from the recession as a result of crippled demand. Prices might temporarily rise in the short run if the data released from markets reveals an improvement.