Yesterday, crude oil prices spiked again as the dollar lost grounds against the euro on speculations that they may hike interest rates again giving the single currency support. Once again investors entered the crude market as a hedge against inflation and the falling dollar.
Also foreign investors are attracted to the markets as they hold a stronger so it is cheaper for them. As investment funds flowed into the market, prices started inclining again adding to economies inflationary pressures. The contract gained $5.49 as it closed at $127.79 while recording a high of $128.38 per barrel and a low of $121.61 per barrel.
Black gold prices today are steady above the $128 per barrel as the greenback is still weak. Despite the slowdown and sufficient supplies in the market while demand is already crippled, the attention is now on the weaker dollar as it has center stage as we wait confirmations for its tren depending on the Labor Report later today. Today the markets opened at $128.20 while recording a high of $128.60 per barrel and a low of $127.88 per barrel.
Reminding you of Wednesday, the EIA report was released showing that the U.S. commercial crude oil inventories declined by 4.8 million barrels from the previous week. At 306.8 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 increased by 2.9 million barrels last week, and are in the lower half of the average range. Both finished gasoline inventories and gasoline lending components inventories increased last week. Distillate fuel inventories increased by 2.3 million barrels, and are in the lower half of the average range for this time of year.
I believe that on the short term prices will keep inclining due to the weakness of the dollar if it remains to depreciate but on the longer run prices will have to start falling again due to global slowdown since demand is currently crippled or until economies pick up on growth.