Yesterday as the US fundamentals came out showing an unexpected fall in consumer confidence which was the reason for why the dollar depreciated yesterday, oil prices slightly inclined. A weak greenback boosts demand for dollar backed commodities because it is attractive to foreign investors who hold a stronger currency.
Some traders started selling their oil contract fearing the US recession and the dampened demand, while other investors are buying in response to the falling dollar as oil is known to be a hedge against inflation and a weak dollar. Crude prices continued to fluctuate gaining $0.36 per contract while closing at $101.22 per barrel reaching a low of $99.13 per barrel and a high of $101.86 per barrel.
Crude for today is continuing to rise as there are tensions in southern Iraq and investors fear that this may hurt oil supplies. Traders are drawn to the crude market as Feds are expected to cut interest rates a couple of more times again this year to try to sustain economic expansion. As long as there are expectations of another rate cut, this will weaken the greenback and again as stated before will encourage more investors into the crude market which will rally crude prices. Today the market opened at $101.55 per barrel reaching a low of $101.43 per barrel and a high of $101.94 per barrel.
The EIA report is scheduled to come out today with an expected rise of 1.7 million barrels in crude stockpiles. Gasoline is predicted to have fallen by 800,000 barrels. As for stocks of distillates which includes diesel fuel and heating oil is supposed to show a fall of 1.6 million barrels. Investors seeing that there will be an increase in crude supplies will slightly bring prices down in fear that there will be weakened demand by the world's biggest crude consumer.