Crude oil prices near $84
Crude oil prices continued to gain on Wednesday (March 31) thanks largely to the falling dollar. The price of a barrel of crude oil for May delivery settled at $83.76 on the New York Mercantile Exchange. This was a gain of $1.39 or 1.7 per cent.
Even more impressively, oil prices climbed a total of 5.1 per cent during the month of March based on economic sentiment and a growing expectation for increased consumer demand and business expansion in the coming months.
The Wednesday morning jobs report was less than impressive which contributed to declines in the dollar’s value. This catalyst outweighed gains in crude oil inventory levels that were higher than expected based on the forecast from the American Petroleum Institute.
Levels of crude remain high, which would suggest a ceiling on oil prices in the near term. However, the anticipation of growth in demand based on economic optimism seems to be intensifying and driving speculation.
Oil prices actually seem relatively modest when you consider that the first quarter of 2010 marks the fifth consecutive quarterly gain for crude oil prices. Oil climbed by 5.5 per cent during the first three months of the year, though much of that obviously has come just during March.
Oil prices spent significant time in the $30-40 range during the late part of 2008 and early 2009, but have slowly and steadily increased throughout 2009 and early 2010. Inventory levels have been near historically high levels during much of the past five quarters, but oil prices have risen in strong correlation with optimism on the US economy.
The dollar’s improvement in the last several months has helped keep oil prices somewhat under wraps, but the emotional push of the economy and the anticipation of more buy-in from consumers and businesses have apparently been more impacting on the market.
With unseasonably warm early spring temperatures in many parts of the US, Americans may already be thinking about plans for summer vacation travel. The summer is generally one of the busiest times for travel, but in the last two years, many have been more budget-conscious. This has even led to widespread use of the word “Stay-cationâ€, meaning to stay near home for vacation.
Perhaps this is the summer transportation demand returns to normal, driving up fuel prices and demand for petroleum-based products.
About Pete Southern
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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