Oil prices are once again trading at record highs today following a very bullish inventory report from the U.S. Energy Department. Prices had been down earlier in the session, but are currently trading up $3.90 to $94.28 after setting a new record of $94.56 earlier in the session.Today's price move comes in reaction to the weekly inventory report which showed that America's oil supplies have dropped to a new 2-year low. Leading into today's report, analysts had been expecting to see a rise last week of 400,000 barrels of crude, but were shocked to discover that supplies actually fell by 3.89 million barrels.
On Monday I wrote a post posing the question of if and or when we will be seeing $100 oil. In that article I stated that I felt we were definitely heading to $100 oil, but that it would probably take a couple more weeks to get there. That was, unless we got another big miss in inventories, which we now have seen.
Due to today's big drop I now think there is a very good chance that prices could hit $100 by the middle of next week. If we do get a rate cut from the Fed today of 25 basis points prices should continue to move higher. If, however, we get a 50 basis point cut, then oil could head to $100 very quickly.
For now we will just have to wait and see what decision the Fed reaches before we can predict too much further into the future.
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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