Supply concerns are back in the market as the EIA report came out showing that the U.S economy is demanding crude heavily which caused a decline in inventories. As the U.S is known to be the world's largest consumer, prices gained heavily on the fears that there is insufficient crude supply in the market as funds flew into the market. Although prices are already soaring, this is not dampening consumers demand. The contract gained a surprising $5.07 as it closed at $136.38 while recording a high of $138.30 per barrel and a low of $131.35 per barrel.
Today prices started reversing their trend as the greenback gains versus major currencies while investors start walking away from the markets as they lock in on profits easing inflationary pressures. Before dollar denominated assets were rising on the back of a weak U.S dollar as investors saw it as a hedge against and a weak U.S currency while foreigners found it appealing as they hold a stronger currency. The markets opened at $136.54 while recording a high of $136.99 per barrel and a low of $135.13 per barrel.
The EIA report was released yesterday showing that U.S. commercial crude oil inventories declined by 4.6 million barrels from the previous week. At 302.2 million barrels, U.S. crude oil inventories are at the lower boundary of the average range for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, and are in the lower half of the average range. Finished gasoline inventories remained unchanged last week while gasoline blending components inventories increased during this same time. Distillate fuel inventories increased by 2.3 million barrels, and are in the lower half of the average range for this time of year.
Traders watch carefully today the trend of the dollar as they look forward to the U.S releasing their fundamental data concerning retail sales which will keep the dollar vigorous in the market, therefore, causing prices to continue their decline today. Investors await in fear while consumers gladly hope for any kind of price ease.