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EIA report Helps Oil`s Tragedy

Publish Date28/11/2012 04:58:34 PM

Last Update28/11/2012 05:20:36 PM

EIA report Helps Oil`s Tragedy

Despite the oil`s obvious downside bias, the EIA gave the commodity some upside momentum in order to resist the downside pressure coming from Fiscal Cliff fears and the stronger dollar.

The U.S. economy is still not showing signs of recovery in the near future, the Democrats and the Republicans still didn’t reach an agreement over the budget, to avoid the fiscal cliff. If the fiscal cliff occurs, the U.S. economy might face crisis that will push the economy back into recession.

Surprisingly, the new home sales came worse than the previous month reading, despite the Federal Reserve efforts to stimulate the housing sector through its third round of quantitative easing.

Oil prices were going down amid fears of fiscal cliff, but today the Energy Information Administration (EIA) report inspired an increase in oil prices but the overall picture for the commodity remains negative so far.

The EIA report announced a drop by 0.3 million barrel in U.S. oil reserves, compared to the previous decline of 1.5 million barrel. However, U.S. oil reserves dropped last week worse than the expectations of an increase of 0.4 million barrel.

The report also showed that the U.S. oil reserves have reached 374.1 million barrel, which is higher than the average of this time of the year. Total motor gasoline inventories increased by 3.9 million barrels last week and are in the lower half of the average range. Distillate fuel inventories decreased by 0.8 million barrels last week.

At 11:14 am New York time, crude oil prices declined to currently trade at $86.31 per barrel, recording the lowest at $85.73 per barrel and the highest at 87.25, after today’s  opening price at $87.20 per barrel.

The dollar index, which tracks the dollar movements versus a basket of major currencies, rose to 80.46 after opening today`s trades at 80.38, it recorded its highest at 80.59 and its lowest at 80.33 and that was as we said one of the main reasons behind oil`s downside bias.

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