Oil is a commodity that has steadily rose since December. Continuing its monumental climb, the commodity rose near $80 a barrel on Wednesday as the dollar continued to weaken, trumping a report pointing to a rise in U.S. oil inventories.
While this trend may be confusing to the everyday investor, analysts have stated that the drastic change in the price of oil is tied to how global stock markets are doing and the dollar’s fluctuating exchange rate. One such analyst is Oliver Jakob. Jakob, who is renowned globally for his spot-on predictions of market trends, stated in reference to the jump in oil prices that, “This has nothing to do with any oil supply and demand fundamentals.”
The Energy Information Administration is the benchmark for the market and they are scheduled to release its supply data on Thursday. While investors anxiously await that report, a survey from the American Petroleum Institute was released on Tuesday which showed a dramatic rise in U.S. oil inventories with crude stocks increasing to 1.2 million barrels which exceeded the expected rise by 200,000 according to a survey conducted by Platts.
Crude has bounced near $80 a barrel for the last two weeks with the threat of Hurricane Ida looming. Hurricane Ida is a one-time hurricane in the Gulf of Mexico that weakened significantly before reaching oil installations near the Gulf Coast on Tuesday.
With many unknown entities and the U.S. economy showing mixed reactions to constant market forces and a weakened U.S. dollar, the one constant investors have seen in these trying times is that oil has risen from $32 a barrel since December and many global analysts expect this upward trend to continue.
Market expert Aaron Smith who uses technical analysis to help manage more than $1 billion of assets for investment firm Superfund Financial in Singapore stated, “I wouldn’t be surprised to see crude trading at $100 before you know it. Certainly 20 to 30 percent upside from here is much more likely proposition than the opposite scenario.”
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