Filed under: International markets, Products and services, Consumer experience, Middle East, Economic data, Commodities, Oil, Federal Reserve
Oil prices have dropped slightly today following the weekly inventory report from the U.S. Department of Energy. Typically, the weekly inventory reports are able to move prices one way or the other, but this week we got blended signals, and consequently, prices haven’t reacted too much in either direction.
Following the current surge in oil prices, traders were looking for some concrete data to justify more price moves, but they were given a larger than expected decline in gasoline inventories, but higher than anticipated oil inventory numbers .
Analysts were anticipating to see gasoline inventories drop by 2.1 million barrels, but the actual decline was 3.2 million barrels. Not good news for drivers that are already feeling the pain of record high gasoline prices. On the oil side, analysts had been looking to see inventories rise by 1.1 million barrels, and the actual increase was over twice that amount, at 2.4 million barrels.
So, blended messages, and nothing to really cause prices to move too much. Oil was trading down 7 cents following the news. With the recent craze that has been taking place in the oil market, today’s report could at least create a slow pull back in oil prices, but don’t anticipate any earth shaking moves to the downside.
But what is really on everyone mind are gasoline prices. With the summer driving months rapidly approaching, everyone is holding their breath in hopes that the national average isn’t $4.00 a gallon this summer. For some areas of the country, however, $4.00 gasoline is already a reality, and there’s no telling just how high says like California will see prices head before it is all said and done.
Current gas prices have already started to impact consumer demand. According to a recent report, gasoline demand is up 0.9% from the same time last year, an increase that’s lower than what we are used to seeing this time of year.
So we might see prices begin to ease a bit over the next week, but long term I still think that prices are going to remain at, or even higher than current levels. The U.S. dollar has yet to rebound, and more interest rate cuts are on the horizon. The perfect recipe for high oil prices.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.
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