Oil prices take a severe plunge as crippled demand concern filled the market due to the global slowdown. Also as Federal Reserve Bank Chairman Ben Bernanke took the stand yesterday at the International Monetary Conference in Spain yesterday indicated that interest rate cuts will not likely be seen.
In regards to this the dollar shot through the roof as it gained against majors as this caused investors to gain confidence in the US dollar while resulted in them leaving the crude oil markets as they once hedged against inflation and the falling dollar. The contract shed $3.45 as it closed at $124.31 while recording a high of $127.98 per barrel and $123.87 per barrel.
Today black gold prices are steady as U.S gasoline demand declined 4.7% during the Memorial Day holiday which was last week Monday as consumers cut back on consumption after gasoline prices were surging. Investors are finally coming to senses as they believe that prices have reached their peak and will start declining even more as they lock in on profits and evacuate the crude oil markets. The markets today opened at $124.23 while recording a high of $124.59 per barrel and a low of $123.80 per barrel.
The EIA report is scheduled to come out today showing expectations that oil inventories increased by 2.7 million barrels as gasoline stockpiles are projected to have risen by 825,000 barrels. As for distillates which include heating oil and diesel fuel, it is also forecasted to report an increase of 1.68 million barrels. If the EIA predictions are correct, then crude prices will resume their decline as the global slowdown dampens demand while lowering prices.