|Analysis||Once again fears of crippled demand is in the oil markets especially as the United States, the biggest crude consumer in the world, released its EIA report showing that although oil stockpiles dipped, yet gasoline inventories climbed and this meant that demand remains weak in the nation. Investors after the release of the report right away panicked as they began stepping out of oil markets and as funds flew out, prices plunged. The contract shed $1.31 closing at $69.57 while recording a high of $71.76 per barrel and a low of $68.88 per barrel.|
The EIA report was released yesterday showing that the U.S. commercial crude oil inventories decreased by 1.0 million barrels from the previous week. At 337.4 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 increased by 2.9 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 0.7 million barrels, and are above the upper boundary of the average range for this time of year.
The U.S. stock markets closed fluctuating as some investors are waiting for company profits to be released while on the other side; congress stated it would help first time house buyers and this definitely increased risk appetite in the markets especially as investors were aware the reason behind the global recession was the sub-prime mortgage crisis. Looking at oil shares, we see that Exxon Mobil gained 0.01 points or 0.15% to $68.67, ConocoPhillips leaped 1.29 points or 2.66% to $49.70 while Chevron Corp. slipped 0.05 points or 0.07% to $70.51.
Today, we see oil prices climb as a result of the federal currency declining in the markets versus major currencies and this made commodities more attractive to investors since they are priced in dollars so now they are cheaper as an investment. As the appeal of oil markets was increased, we see that the markets opened at $69.80 while recording a high of $70.48 per barrel and a low of $70.48 per barrel.
The volatility in the oil markets gives us evidence that investors are confused about the trend of oil prices, while we see that oil prices in the long run are pressured from the global recession which means crippled demand on energy products which is weighing heavily on oil prices.