Oil prices reached a new 6 month high today, following a weekly inventory report that lead investors to believe that demand is rising for the precious crude.Going into today's report from the Department of Energy, analysts had been expecting to see a drop of around 1.5 million barrels, but the actual drop came in larger than expected, with a reported 2.1 million decline in inventories for the week ended May 15.
There has been a lot of speculation as to whether or not America is close to coming out of its current recession, and oil prices have been moving higher as a result. Despite the larger than expected drop in inventories last week, we are still looking at levels that are running 18.3% higher than last year, so there is still plenty of excess supply out there.
Earlier today, the Federal Reserve announced that it now expects to see things in America start to improve over the next couple of months, and that recent actions to stem the current recession are starting to work. This comes as welcome news to the market, despite the fact that unemployment projections have been lifted to 9.6%, higher than the previous forecast of 8.8%.
For most people, oil prices translate into one main thing... gasoline prices. Last summer we were hit with $4 gasoline, and luckily it does not appear as though that will be our fate again this summer.
However, gasoline prices have been inching up again as we head into the busy summer driving months. Prices are now sitting at $2.334 a gallon, which marks a jump of 27.6 cents over the past month. A couple years ago, this would have seemed very expensive, but compared to where we were last year at this time, prices are $1.446 cheaper a gallon.
Oil traded up as high as $62.26 earlier in the session before closing the day at $62.00 a barrel. We are still very shy of the highs that we hit last summer, but oil has been moving steadily higher, and will probably continue to do so over the next couple of months. Will we be talking about $100 oil before the end of the summer? Probably not, but don't be too surprised if we see prices heading into the mid $70's over the next couple of months, if not much sooner.
This weekend is Memorial Day weekend, and with gasoline prices being so much lower than they were this time last year, more Americans are expected to hit the road. Over the next month we should get a better idea of just how much gasoline demand will effect prices at the pump. A lot of analysts are already predicting $2.50 a gallon by the middle of the summer, but at the rate things are moving, we could get there much faster, and go much higher.
Have you started to feel the recent jump in gasoline prices over the past month? Have prices moved up high enough to impact your travel plans this summer, or will you plan to travel more this summer now that gasoline is "only" $2.33 a gallon?
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Reader Comments (Page 1 of 1)
5-20-2009 @ 6:31PM
uscyeahright said...
2.33 a gallon? Bullshit. It's 2.54 already here in upper michigan.
5-20-2009 @ 11:33PM
Iridium said...
Inventories dropped because refineries are cutting back on production and the ample stock of oil and gas need to be used before new oil is added.
The drop in inventory is expected. It isn't from anyone using more gas. The drop is just used an excuse by the oil terrorists to steal a few more dollars per barrel before they sell a contract off.
There is nothing more dirty that the commodities market right now. I will tell you what a retired millionaire who dabbles in the market for fun told me. He told me three years ago that he and a few other people were going to do to the commodity market what they did to the general market. He said that the commodities market was wide open to the tactics used in the general market to drive stocks up and down within a day. That gold, oil, and other commodities were wide open for profit taking. Gold and oil would be day traded and easily manipulated.
People like him took over and manipulate the commodity market just like they manipulated the general market for years. The boom bust cycle has hit commodities hard and we will get record drive after record fall until something changes. The rules that were repealed are perhaps the most treasonous acts our government has ever partaken in. Every senator and every congressman that voted to repeal the laws that governed the markets should be held for treason. They have enabled foreign and domestic enemies to harm American citizens. It is the definition of treason and their actions should be seen as such. They should be tried and sentenced for their crimes. It isn't crazy and it isn't going to far. It is not going far enough. We have gone far beyond the point to justify a revolution as stated in The Declaration.
We are being held hostage by a market that does not answer to the rules of capitalism, that does not answer to statistics or the economy. Very soon we will hit the point of no return and we will wake up in a society we no longer recognize. Reagan was right. Freedom is always one generation away from extinction. The boomer generation sold out the future and their own children for a posh SUV, a Grande Latte, and a pricey cell phone. I hope it was worth it. I'm sure none of you care what you have done because you won't be around to live with the consequences. It must be great to not care at all.