Crude prices witnessed the steepest plunge in 17 years yesterday as the EIA report came out showing there is excess supply of oil inventories. Traders fear that the current recession in the US will dampen demand for crude since they are known to be the world's biggest crude consumers, and this caused prices to decline. As the dollar gained strength against majors due to profit taking, dollar traded commodities declined. The contract shed $5 closing at $102.54 per barrel reaching a high of $107.89 per barrel and a low of $101.79 per barrel.
Today, oil continues to decline as investors are uncertain of the future outlook of the crude market. As April contract ended yesterday, May contract opened today at $102.10 per barrel. Traders are now centering their attention on the global slow down of the economy fearing that it will continue to hurt crude demand as they overlook the EIA report that came out showing a lower than expected rise in oil inventories. The contract today reached a high of $102.69 per barrel and a low of $101.32 per barrel.
The EIA report came out yesterday showing that the U.S. commercial crude oil inventories rose by 0.2 million barrels compared to the previous week. At 311.8 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories decreased by 3.5 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories decreased last week. Distillate fuel inventories decreased by 2.9 million barrels, and are in the lower half of the average range for this time of year.
Finally investors are now paying attention to the supply and demand of oil as it has a major effect on oil prices. As crude demand will continue to cripple due to the global slow down, the prices of oil will continue to fall.