|Analysis||As the world's second biggest nation, Japan released its third quarter GDP showing that the nation expanded to 1.2% surpassing market expectations and this spread confidence in the markets regarding a global recovery taking place. From the upbeat data, encouraged investors to enter oil markets as they looked forward to rising demand on oil therefore they seek potential in profits, which supported oil prices. |
Also as the dollar lost grounds in the markets versus major currencies, supported oil prices to rise further since commodities are priced in dollars therefore it becomes cheaper for investors. The contract gained $2.55 closing at $78.90 while recording a high of $79.43 per barrel and a low of $76.35 per barrel.
The U.S. stock markets rose yesterday as there was increased risk appetite in the markets pushing investors to higher yielding assets. Looking at oil shares, we see that Exxon Mobil gained 1.96 points or 2.70% to $74.43, Chevron Corp. rose 0.67 points or 0.86% to $78.61 while ConocoPhillips leaped 1.01 points or 1.91% to $53.84.
Today, oil prices are slowly declining as investors are beginning to lock in on profits, which mean that funds are starting to fly out of the markets therefore dragging prices down, while also the dollar is gaining momentum rebounding from yesterday's losses. The markets today opened at $78.93 while recording a high of $79.07 per barrel and a low of $78.46 per barrel.
Although we saw prices rise yesterday, but our opinion remains the same that as a result of the global recession that still has not bottomed out, oil prices will continue to decline in the long term as demand is weak led from rising unemployment rates around the world which means that spending is pared which weighs on oil prices heavily.