|Previous||2.8 million barrels|
|Forecast||2.0 million barrels|
|Analysis||Yesterday, black gold market prices leaped as a result of the dollar tumbling in the markets, and as commodities are priced in dollars then investors are more attracted to oil as an investment since now it becomes cheaper for investors as they have a stronger currency. As funds flew in the markets helped boost oil prices as the contract gained $0.47 closing at $70.88 while recording a high of $71.97 per barrel and a low of $70.06 per barrel.|
The U.S. stock markets yesterday followed the European stock market as it closed in the green territory as a result of optimism flooding the markets especially after the central bank of Australia hiking interest rates on signs of economic improvement. When optimism is seen in markets, investors usually tend to enter equity markets therefore supporting the gain. Turning to oil shares, we see that Exxon Mobil gained 1.08 points or 1.59% to $68.66, ConocoPhillips rose 0.55 points or 1.14% to $48.41 while Chevron Corp. climbed 1.17 points or 1.68% to $70.56.
Oil prices today extend their gains especially as the American Petroleum Institute released its U.S. oil stockpile showing that crude inventories plunged 254,000 barrels surprising markets as this meant that demand was improving in the U.S. Investors usually watch the U.S. economy data since it is considered the world's biggest crude consumer, and if supplies are declining therefore this would mean higher demand which would attract investors to markets.
Later on today, the EIA report is scheduled to be released with expectations showing that supplies are to climb 2.0 million barrels from the previous gain of 2.8 million barrels, if these projections are accurate then we would see prices decline since the weaker demand means that it would disappoint investors causing some to flee. The markets today opened at $71.16 while recording a high of $71.76 per barrel and a low of $71.12 per barrel.
The ongoing global recession is a much greater factor than improved data from major economies and this will pressure prices causing them to continue to their plunge on the long term while on the short term they will continue their temporarily rise, but then the downwards trend will continue.