|Analysis||Oil prices declined yesterday for the first time this week as a result of lower equity prices, which therefore hinted that fuel demand and that the U.S. economy will recover but at a weak rate, leading to more investors leaving the oil markets. As funds flew out, since investors decided to lock in on profits, we saw oil prices plummet. The December contract dipped $2.12 closing at $77.46 while recording a high of $79.87 per barrel and a low of $77.06 per barrel. |
The EIA report was released Wednesday showing that the U.S. commercial crude oil inventories decreased by 0.9 million barrels from the previous week. At 336.8 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 decreased by 1.7 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 0.3 million barrels, and are above the upper boundary of the average range for this time of year.
The U.S. stocks shed points on worries that the stock markets have outpaced the forecast for economic growth. Looking at oil shares, Exxon Mobil Corp. dipped 0.62 points or 0.82% to $74.65, Chevron Corp. fell 1.58 points or 2.00 to $77.34 while ConocoPhillips declined 1.02 points or 1.90% to $52.56.
Today, the December contract is set to expire later on in the day, while currently prices are steady after the severe decline they marked yesterday. The markets today opened at $77.59 while recording a high of $77.99 per barrel and a low of $77.39 per barrel. Prices are calm as there are mixed economic signs about the global recovery taking place, while investors eye the U.S. economy in specific, since it is considered the world's biggest oil consumer.
The outlook for oil prices in the long run is that it will continue to decline as a result of the global recession which weighs heavily on oil markets therefore holding back prices from rising led from the crippled demand.