Yesterday crude oil prices plunged due to the vigorous greenback despite the biggest drop in US crude stockpiles since 2004. Investors turned their attention from supply factors as they focused more on the rallying USD as they started walking away from the crude market. Investors at once hedged against inflation and the falling dollar and that was the reason behind the surging of oil prices lately.
Also as the US released its economic data regarding GDP showing that it grew at a faster pace in the first quarter, prompted investors to gain confidence in the U.S economy as they entered the stock markets while leaving crude markets. The contract shed $4.41 while recording a high of $133.12 per barrel and a low of $126.11 per barrel as it closed at $126.62.
Rising anticipations that the Feds may hike interest rates this year gave the dollar the best support possible as investors' risk appetite returned as more and more investors lost interest in the crude markets while prices continued their slip again. In addition to that, US fuel demand dampened by 0.7% to 20.5 million barrels a day as prices have been surging while there is a global slowdown and likely to cripple energy products' demand worldwide. Today the market opened at $126.59 while recording a high of $126.59 per barrel and a low of $126.00 per barrel.
The EIA report was released yesterday delayed from Wednesday due to Memorial Day Holiday on Monday. It showed that the U.S. commercial crude oil inventories declined by 8.8 million barrels from the previous week. At 311.6 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. The drop was due to temporary delays in crude oil tanker off-loadings on the Gulf Coast.
Total motor gasoline inventories fell by 3.2 million barrels last week, and are near the lower limit of the average range. Finished gasoline inventories remained unchanged last week while gasoline blending components inventories decreased during this same time. Distillate fuel inventories increased by 1.6 million barrels, and are in the lower half of the average range for this time of year.