Crude oil prices finally dipped as greenback gained momentum against major currencies, causing investors to lock in on profits. Investors now are less attracted to the dollar backed commodities as once they were encouraged to enter the crude oil markets as it was a hedge against inflation and the falling dollar.
Eyes are starting to turn away from the supply and demand factor as everyone now is paying attention to how the greenback is reacting. Yesterday, the contract shed $2.24 as it closed at $116.06 while recorded a high of $118.30 per barrel and a low of $114.25 per barrel.
Today, oil is continuing its bearish wave as investors are still leaving the crude oil market as they feel that the US dollar might be bottoming out soon. The market sentiment is improving as people are starting to gain confidence again while investing in greenback. The market today opened at $115.95 while recording a high of $116.05 per barrel and a low of $115.44 per barrel.
Reminding you of Wednesday's EIA report, which revealed that U.S. commercial crude oil inventories increased by 2.4 million barrels from the previous week. At 316.1 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 3.2 million barrels last week, and are at the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories decreased last week. Distillate fuel inventories decreased by 1.4 million barrels, and are in the lower half of the average range for this time of year.
The current concern is not on the insufficient supply while there is increased global demand, but on how the US economy is picking up. The performance of the US will determine if there will be future interest rate cuts for the dollar. And if there are any more rate cuts, crude prices will once again start recording all time highs as more and more investors are attracted to the market. If this is not the case, then crude oil prices will finally starting stabilizing.