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Oil prices have been steadily falling over the past week, but reversed course today and managed to gain $0.89 a barrel to close the day at $72.52. Today's rise came despite a bearish inventory report that showed oil inventories rose by 4.11 million barrels last week, well above the 300.000 barrels that analysts had been expecting to see.
When you see such a large jump in inventories, you can usually count on oil prices heading lower, but that was not the case today, as traders decided to shift their attention to the weaker dollar instead.
So far this year, the dollar has been pretty strong, gaining 12% thus far year, but it had a weak day today, dropping 0.3% as investors weighed the news that July home sales were the worst on record.
Sales of new homes in July were down 12% to an annual pace of 276,000. Economists had been expecting to see a pace of 330,000.
Gasoline inventories also surprised analysts by rising 2.27 million barrels last week. Analysts had been expecting to see gas inventories drop by 450,0000 barrels.
Other economic news that weighed on the dollar today was a report from the U.S. Department of Commerce that showed orders for durable goods to American factories rose less than expected last month. Analysts had been expecting to see orders increase by 3%, but the report showed that orders were actually able to increase just 0.3% for the month.
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Reader Comments (Page 1 of 1)
8-25-2010 @ 10:41PM
Peter Van Schaik said...
Remember the old adage "Buy on rumor, sell on news"? In major bear markets that can be just the opposite - "Sell on rumor, buy on news."
It appears the Federal Reserve has finally achieved one of the long term objectives it's held since Paul Volker let interest rates run their natural course: Break the cycle of inflationary expectations which kept pushing prices higher.
We now are expecting lower prices and we will keep our wallets snapped shut and our purse strings drawn tight until we see them. It is a great time to be employed and relatively debt free. Those deep in debt, employed or not, can keep hoping for the inflation the experts keep telling us is right around the corner so they can pay back their obligations with cheaper dollars.