Crude started surging yesterday as greenback depreciated, after the US economic data came out showing bad readings, especially durable goods that devour much oil in the process. Investors seeing that the dollar has weakened, right away took action in investing to hedge against inflation and the falling dollar.
Oil markets yesterday welcomed many investors as the dollar slipped against major currencies, which was a great sign to current oil traders, while consumers were not enthusiastic about the future outlook of the global economy according to inflationary pressure. The contract gained $4.68 while closing at $105.90 recording a high of $106.36 per barrel and a low of $101.43 per barrel.
Today oil prices is continuing to rally as traders feel that the weak economic data of the US that came out proving that the US is still in a recession which will continue to depreciate the dollar. As the greenback losses its grounds, dollar backed commodities benefited from this by being the most attractive in the market, as dampened demand fears were offset by the dollar depreciation and falling stockpiles.
Crude supplies are not hurting the US like it was expected due to the commotion in Iraq which has the world's third biggest oil reserves; but instead as US refineries are decreasing their production, as they shift into the summer season and their customary maintenance takes place, is affecting supplies in the US. The market today opened at $106.00 reaching a low of $105.91 per barrel and a high of $106.49 per barrel.
The EIA weekly petroleum status report was released yesterday showing U.S. commercial crude oil inventories remained unchanged from 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 3.3 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 2.2 million barrels, and are in the lower half of the average range for this time of year.
The supporter to the rush of crude prices we witnessed yesterday was the EIA report; crude inventories coming unchanged after investors were expecting a rise of 1.7 million barrels. So as the US, the world's biggest crude consumer showed that they didn't have an increase in crude demonstrated there was still demand to be seen on oil in which prices increased like we saw yesterday. Crude prices will continue to surge as long as there is a weak dollar and demand on oil, so the bullish wave is so forth set to continueÃ¢â‚¬Â¦