|Analysis||Evidence continues to support the fact that as a result of the global recession, demand for energy products is crippled as yesterday we saw that the U.S. economy released its EIA report showing an increase in oil inventories. Data from the U.S. economy is watched carefully since it is considered the world's biggest oil consumer, and as inventories rose therefore right away we saw that oil prices plunged as investors stepped out of markets. The contract shed $2.34 closing at $76.94 while recording a high of $79.69 per barrel and a low of $76.52 per barrel. |
The EIA report was released showing that the U.S. commercial crude oil inventories increased by 1.8 million barrels from the previous week. At 337.7 million barrels, U.S. crude oil inventories are slightly above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 2.5 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components increased 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 dipped as a result of energy stocks shedding point after the release of the EIA showing that oil stockpiles increased more than it was expected. Looking at oil shares, we saw that Exxon Mobil Corp. dipped 1.01 points or 1.38% to $71.90, Chevron Corp. fell 1.09 points or 1.385 to $77.42 while ConocoPhillips declined 0.94 points or 1.77% to $52.22.
Today, prices are steady after they fell heavily yesterday from the effects of the EIA report while already unemployment rates are at a 26-year high which therefore continues to support the fact that consumer demand is dampened. As investors begin to pull out funds from markets, cause prices to spiral downwards while the markets today opened at $76.78 while recording a high of $77.25 per barrel and a low of $76.00 per barrel.
As long as the global slowdown remains prices will remain pressured to the downside because at a time of recession demand on oil tends to be weak while if anticipations are aroused back in the black gold market regarding the pace of recession easing, will slightly support oil prices on the short term.