Yesterday oil plunged 2.3% after the release of the weekly EIA report which showed that U.S. crude inventories came higher than expected last week, reflecting the slowdown in demand on energy in the world's top crude consumer.
The report released on Wednesday showed that U.S. commercial crude oil inventories increased by 2.1 million barrels from the previous week. At 339.9 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 4.0 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 decreased by 1.2 million barrels, and are above the upper boundary of the average range for this time of year.
However, prices gained today after the announcement by the FED last night that the U.S. economy is improving which boosted equities, lifting most U.S. shares, especially mining companies that surged as gold touched a new fresh record. Today, stocks rallied in Asia, trailing its U.S. counterpart, where the MSCI Asia Pacific Index climbed to 15-month high and Nikkei closed at the highest level in 5 weeks.
Meanwhile, there is confidence that global economies are recovering from the worst economic recession since WWII, especially after the debt woes of Dubai world has eased.
On the other hand, oil gained further support today from the dollar's slump to the lowest in 15 months versus a basket of major currencies as indicated by the dollar index which plummeted to 74.37 compared with the day's opening at 74.62. Commodities spiked taking advantage of the weak dollar, where gold recorded a new high of $1226.25 an ounce while copper jumped to 14-month high.
Today, the Kuwaiti oil minister said he expects OPEC to keep production as is in the coming meeting. It seems that the current price is satisfying for the oil cartel. Economists are predicting that oil will fluctuate between $70 and $80 till the end of the current year.
Oil is currently traded at $77.37 recording a high of $77.47 and a low of $76.52, whereas the contract on Wednesday shed $1.77 closing at $76.60, while recording a high of $78.59 per barrel and a low of $76.22 per barrel.