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When we took a look at oil prices earlier this morning, we saw that traders were selling off the precious crude in anticipation of a bearish inventory report today. Well, the market was shocked by an unexpected large decline in inventories, and prices have reversed course and moved strongly to the upside over the past hour.Before this week's report from the U.S. Energy Department, oil prices had dropped to around $85 a barrel but are now trading up $1.36 on the day to $86.63. The reason? A very surprising drop of 5.3 million barrels last week! Prior to today's report, analysts were mixed but were for the most part expecting to see an increase of about 300,000 barrels. Even the most bullish analysts out there were only expecting to see a decline of 2 million barrels, so the 5.3 million actual draw in inventories definitely caught the market off guard.
The Energy Department attributed the unusual drop to a large decline in imports last week, which fell by 1.3 million barrels a day down to 9.1 million barrels.
Oil is not the only thing that we look for in these weekly inventory reports. We also have to pay attention to levels of gasoline and distillates, both of which also surprised the market with large drops. Distillates fell by 1.8 million barrels, while analysts had predicted a 200,000 barrel increase, and gasoline supplies dropped 2 million barrels, while analysts had been expecting to see an increase of 1.1 million barrels.
As oil prices have been moving higher, so have the prices we're paying at the pump for our gasoline. Prices have been rising lately, and overnight it was reported that the national average for unleaded gasoline rose another 2 cents to $2.822. With last night's increase, the national average has risen by 6.5 cents during the past week and a half, and analysts are predicting that we will continue to see prices head higher to catch up with these high oil prices.
Let's take a look at a current chart for oil to get a better idea of just how strong prices have been lately:
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer
As oil prices have been moving higher, so have the prices we're paying at the pump for our gasoline. Prices have been rising lately, and overnight it was reported that the national average for unleaded gasoline rose another 2 cents to $2.822. With last night's increase, the national average has risen by 6.5 cents during the past week and a half, and analysts are predicting that we will continue to see prices head higher to catch up with these high oil prices.
Let's take a look at a current chart for oil to get a better idea of just how strong prices have been lately:
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer
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Reader Comments (Page 1 of 1)
10-24-2007 @ 2:40PM
Duane said...
I see gas rationing within the next 2 to 3 years,and because of this the stock market will go in to a long term down trend, think about THIS:OIL DRIVES THE WORLDS ECONOMY,WITHOUT OIL THERE IS NO GROWTH. NO GROWTH MEANS MUCH LOWER STOCK MARKET
10-25-2007 @ 9:13AM
john said...
Duane, Duane, Duane; Are you saying that with no growth we could somehow sustain $80-$90 oil AND have shortages? Back to class for you. John