As the summer approaches us, we see a rise in crude oil prices as there is rallying demand on gas in which prices rise along with it. Consumers feel the upcoming financial pressure of inclining oil prices as there already exists recession. While investors in the crude market picked up on gains as prices increased due the unexpected demand of gas, traders in the stock market lost as the US stock market tumbled.
Investors risk appetite decreased as Ben S. Bernanke testified that the economy is currently in contraction while the housing market continues to deepen and credit markets are still tightened. The contract gained $3.85 as it closed at $104.83 while recording a low of $99.84 per barrel and a high of $105.10 per barrel.
Today, crude oil prices have remained steady after it jumped almost $4 per contract after the EIA was released showing a decline of gasoline inventories which proved that gas has an increased demand as consumers get ready for summer traveling. Also supporting the incline in oil prices is the slight depreciation of the greenback as traders entered the commodities market as a hedge against the falling dollar. The markets opened today at $104.53 while so far recording a low of $104.48 per barrel and a high of $104.90 per barrel.
The EIA petroleum report was released yesterday showing that the U.S. commercial crude oil inventories increased by 7.4 million barrels from the previous week. At 319.2 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 4.5 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 1.6 million barrels, and are in the lower half of the average range for this time of year.
In my opinion crude oil prices will continue to fluctuate as investors feel confused as in exactly what trend oil will take. As long as the US economy remains in recession, crude demand will be dampened while taking prices down with it since they are known to be the world's largest crude consumer. Investors hope that soon the US economy will revive and restore demand again since fears now revolve around the global melt down.