|Analysis||The black gold halted its rally for three days as Asian stocks dropped on concerns and uncertainties with regard economic recovery. Oil prices rose yesterday after the release of the EIA report which showed unpredicted slump in U.S. inventories last week.|
The weekly report released on Wednesday revealed that U.S. commercial crude oil inventories decreased by 4.0 million barrels from the previous week. At 335.9 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasolineinventories decreased by 0.3 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories increased while blending components decreased last week. Distillate fuel inventories decreased by 0.4 million barrels, and are above the upper boundary of the average range for this time of year.
Moreover, Bernanke, the chairman of the Federal Reserve, announced the previous day that the economy is recovering and they will keep the borrowing cost close to zero for another period which lifted prices near to its highest in one year touching a high $81 a barrel. Today, the BoE and ECB will announce that rate and the amount of the stimulus package.
Still, there are skeptics concerning global recovery due to the mixed data released from large economies, especially the U.S., the world's largest crude consumer, where eyes are on the labor's report which is due tomorrow. Bank concerns may thwart recovery as many banks are subject to bankruptcy and asking for a bailout from their governments.
On the other hand, equity markets stalled its rally witnessed recently on the persistent worries which are making investors wary of purchasing risky assets. Although U.S. shares closed in the green territory, but it lost some of the gains at the end of the session, while Asian stocks plummeted today with Nikkei index closing at the lowest level in a month.
In currency market, the U.S. dollar surged today, paring some of yesterday's losses as fears in markets spurred demand on refuges. The dollar index, a gauge of the dollar movements versus six major currencies, rebounded to 75.93 compared with the opening at 75.75. The green currencies' slide a day ago gave the chance for commodities to rise, especially gold which touched a new historical high at $1097.66 an ounce.
Meanwhile, oil is traded at $79.75 recording a high of $80.30 and a low of $79.62, whereas the contract a day ago picked up $0.80 closing at $80.40, while recording a high of $81.06 per barrel and a low of $79.12 per barrel.