|
World crude oil prices surged past US$112 today following a report by the US Energy Information Administration (EIA) that showed US-held crude oil and refined fuels stocks at lower than expected levels.
In its weekly inventory report, the EIA reported that crude stocks fell by 3.2 million barrels in the week ended April 4. This was contrary to analysts' expectations of an increase of 2.4 million barrels, according to a Dow Jones poll.
The EIA also reported that gasoline supplies fell by 3.4 million barrels, a significantly bigger decline than analysts had been expecting. And distillates used to make diesel fuel fell by 3.7 million barrels, far more than the expected drop of 1.2 million barrels.
These reports affected a crude price that was already high due to the dollar's slide against the euro on that day.
Many investors see commodities such as oil as an effective hedge against a falling dollar and inflation. Also, a weaker dollar makes oil cheaper to investors overseas and some analysts attribute a significant proportion of oil's rise this year to speculative buying tied to the falling dollar. Some analysts expect the US Federal Reserve to cut interest rates several more times this year, which will likely further weaken the dollar, which may cause crude prices to continue rising, despite expectations of reduced US demand for oil due to economic downturn. |
