Traders are selling oil off today after a government report that showed inventories rose last week. Going into this week's inventory report from the Energy Information Administration, analysts had been expecting to see oil inventory drop by around 2.25 million barrels. What today's report actually showed though was an increase last week by 2.8 million barrels.
The sharp increase in supplies have definitely sparked fears over demand, but today's move could reverse itself very quickly following this week's meeting by the Federal Reserve.
No one is expecting any changes out of the Fed regarding interest rates, but everyone is awaiting to hear its thoughts on the current recession. Should the Fed come out with a comment like, " we are firmly out of the recession", then you can expect to see a turn around in oil prices this afternoon.
Gasoline inventories also were above analyst estimates for the week. Analysts had been expecting to see an increase of 800,000 barrels, and the actual report showed that gasoline supplies had increased by 5.4 million barrels. Overnight, gasoline prices dropped to $2.540 down from $2.544.
Oil prices have fallen $2.75 today, down to $69.01 from $71.76. Earlier in the session, prices traded as low as $68.57.
Here is a chart on oil so you can see the range oil has been trading in:
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