As traders steadily buy crude as a hedge against the depreciating dollar and or against inflation, oil is in a constant rise. Crude breached an all time record high of 110 dollar per barrel since it is priced in dollars it is cheaper for foreign investors to invest in as the greenback is weak against major currencies.
Seeing that the dollar will decline even more as there is an expected upcoming interest rate slash, oil will continue surging. Yesterday, the contract gained $1.17 closing at $109.92 per barrel to reach a low of $107.09 per barrel and a high of $110.12.
Investors are not worrying about the supply and demand of crude as long as the US remains in recession and also with the uncertainty of what the next interest rate cut will be, they will keep investing in the crude market. In addition to the falling dollar of why oil prices are rallying is how OPEC decided to keep their production steady. Crude market opened up today at $110.06 per barrel with a low at $109.37 per barrel and a high of $110.12 per barrel.
The EIA report came out yesterday showing that the US commercial crude oil inventories rose by 6.2 million barrels compared to the previous week. At 311.6 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories increased by 1.7 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories decreased by 1.2 million barrels, and are in the lower half of the average range for this time of year.
On Tuesday, the Feds decided to pump $200 billion in the market in an attempt to recover from recession and the sudden effect of that was the greenback started gaining grounds again. This helped reduce rate cut expectations from 100 basis points to 75 basis points. However, now the dollar started deprecating due to the doubt of the US economy and poor stock market performance. This is just giving crude prices more support.