Oil prices flirted with the psychological $40 barrier today after a report from the U.S. government showed that inventories swelled much more than expected last week.Going into today's weekly inventory report, analysts had been expecting to see in crude inventories of around 1.9 million barrels. While that would have been a bearish indicator in its own right, the actual figures were a much more bearish reality that U.S. demand is still not picking up as we would like, as actual oil inventories rose by a massive 6.1 million barrels for the week.
It's been a tough day all around for oil, as the market has been hit not only with today's bearish inventory report, but also news earlier in the day that new home construction in December hit an all time low, and that Asian economies have been extremely hard hit with recessions of their own.
Prices fell as low as $40.41 earlier in the day, but have rebounded slightly, and are currently trading down $1.81 to $41.74.
Oil, which saw a massive price drop during the second half of 2008 had been looking as though ready to rebound a bit at the end of the year, but so far in 2009 prices have been moving steadily lower, and with today's move they are once again near their yearly lows. Here is a chart of the precious crude to put its price move over the past 6 months to put a little more perspective in just how sharply prices have fallen:
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)
1-22-2009 @ 3:55PM
Iridium said...
Go ahead keep saying that oil dropping closer to realistic prices is a bad thing.
Take every chart that came out over the past 3 years and burn them. They are completely worthless. They price oil as a hedge fund plaything, not a real traded commodity.
Oil should be below $25 a barrel right now. If oil never went on its LSD trip. We could actually see $10 per barrel oil right now. That is what the demand figures show.
If all the bogus traders that entered the oil market over the past few years don't get out they will need to be forced out.
If Barack Obama has any balls he'd put a freeze on oil trading and put all of the old safeguards back in. Then you restrict oil trading to people who actually use oil.
Obama doesn't want this though. He wants his team of billionares to drive the price of oil sky high so the governemnt can pass all kinds of alternative fuel laws. So his billionare buddies can make out like bandits.
1-22-2009 @ 4:23PM
Mike Rath said...
I had a flat tire today and my dog is limping... Is that Obama's fault as well????