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Oil prices have continued to soar, and today they rose above $132 a barrel following this week's inventory report from the Department of Energy.
Prices climbed to a new record high of $132.08, but have since cooled off a bit and are currently sitting at $131.72. The reason for today's jump (OK, at least one of the reasons) was an unexpected drop in both crude oil and gasoline inventories last week.
Analysts had been expecting to see oil inventories rise bit a bit last week, and were shocked when they learned that the actual inventories numbers were in the red, and not just by a little, but by five million barrels. Looking at gasoline inventories, analysts had been hoping to see modest gains as well, but were once again shocked to see the numbers actually falling last week.
The recent oil market has been so bullish, chances are that today's inventory report would not have been able to cool things down even if we had been handed a bearish report. But since we were given a bullish inventory report, not to mention a very bullish one, what we have seen is yet another major move to the upside.
Also playing a factor in today's market action is the U.S. dollar. Last week it was starting to look like that ailing U.S. greenback was going to start to recover and build some momentum headed into the summer months, but that sentiment seems to have reversed, and the dollar has once again moved lower over the past couple of days, and in the process has pulled the oil bulls back into the market and pushed prices higher to where we are now.
OK, I know what you want to hear next -- what about gasoline prices? Well, you can be sure that things are not going to get any better any time soon. With oil continuing to rise, things will only get worse for you at the pump. Last night the national average rose slightly, up to $3.807. We are getting alarmingly close to the dreaded $4 mark that many analysts have been predicting. In some areas of the country (Chicago and Long Island), $4 gas is already a scary reality. Let's hope it does not spread to the national level, or else we really could be in store for a rough summer.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
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Reader Comments (Page 1 of 1)
5-21-2008 @ 2:46PM
The Baron said...
Isn.t there anyone in our goverment that knows that we could be buying crude at less than $40/barrel if we purchased it directly from the producers instead of the commodity Exchanges. The prices of crude should not be in the hands of speculators. Right now,this country does not have the refineries to refine the crude available to it, If and when crude hits $150/barrel,the price of gas at the pump will be $5+/gal and heating oil at $6/gal. And at that moment,our terrorist enemies won't have to fire a shot against us. They will just watch and laugh at a nation that allowed ignorance and greed to destroy it.
5-21-2008 @ 3:54PM
LarryG62 said...
Interesting that the hypocrites in the democrat party who have been blocking efforts to drill for our own reserves for years are yeling like stuck pigs. Pigs they are, because they glom onto everything they can with taxpayer money, but expect the rest of us to do without. When are you ignorant democrat supporters going to wake up and smell the roses, and help the rest of us vote the slugs out of office?
5-21-2008 @ 7:51PM
mike said...
Bush knows that he has less than a year left to bankrupt this once wonderful nation, so he is jacking up oil and gas prices to daily record highs. Unless Bush and Cheney are kicked out of the white house, we *will* see oil prices upwards of $200 a barrel and gas prices maybe even upwards of $8 a gallon by the end of the year if not sooner.
5-21-2008 @ 7:59PM
David said...
Bush, Speculators, Index Funds have very little to do with the high price of Crude Oil. The lack of refinery capacity has only a very small bit to do with the price of oil.
The days of finding oil cheaply are gone. The largest fields in the world are in decline. Just look at the severe decline rates Mexico is facing in Cantarell. Instead we are getting oil by heating up tarsands.
Even after all of the price increase we aren't seeing any large increases in supply. Especially from non-opec. Even Russia is saying it will not be able to increase oil production this year and they have been steadily increasing production for more than a decade.
Price will climb to the point where demand is destroyed, and given the fact that China, India, Russia, the middle east all subsidize energy consumption that isn't going to happen easily.