Crude oil prices slipped as the EIA report came out showing that there is dampened demand from the world's largest energy consumer the US inventories were larger than expected. The American people are finally starting to put into consideration the high energy prices while they cut back on demand, but still driving is not affected as there is still demand for gasoline. The contract yesterday shed $2.17 as it closed at $113.46 while recording a high of $116.70 per barrel and a low of $113.30 per barrel.
Today crude oil prices started to rally again as the strike continues in Nigeria causing them to slow production. Supply and demand factors are once again back into the market while investors are afraid that the US supplies will be hurt before they even demand crude oil due to the tensions in Nigeria.
Also crude oil prices were positively affected by the weakened dollar as the Feds cut interest rates by 25 basis points causing the greenback to depreciate against major currencies. Dollar backed commodities continue to gain as investors become more attracted to the market while they hedge against inflation and the weak dollar. Today the market opened at $114.60 while recording a high of $115.23 per barrel and a low of $114.50 per barrel.
The EIA report was released yesterday showing that the U.S. commercial crude oil inventories increased by 3.8 million barrels from the previous week. At 319.9 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 1.5 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories rose last week while gasoline blending components inventories declined during this same time. Distillate fuel inventories increased by 1.1 million barrels, and are in the lower half of the average range for this time of year.
As long as there are riots happening in Nigeria, crude oil prices will continue to rise while investors' worry more and more about the lack of supply as it's already positively affecting prices. So as long as there are tensions in Africa's largest crude producer, prices will continue to spike.