Current Oil Prices Rise Slightly

There was a slight increase in the current oil prices recently. The rise is partly attributed to decline in crude oil inventories and the new bond-buying program of the European Central Bank aimed at helping the financially challenged countries in the euro zone.

In the NYMEX, the crude oil price per barrel for October delivery gained 17 cents to finish at $95.53. Meanwhile, the current oil price of Brent for October moved 40 cents higher to $113.49 per barrel, in London trading.

The petroleum report of the US Department of Energy showed a fall in crude oil inventories in the past week, a circumstance which usually pushes prices upward. Crude inventories of the United States lost 7.4 million barrels to 357.1 million barrels during the week that ended August 31, according to the DOE.

Hurricane Isaac affected supplies when it passed through the Gulf of Mexico in the past week. Over 90 percent of the Gulf’s crude production capacity had been restrained as staff was evacuated from offshore platforms and almost nine refineries were shut down.

The production in the Gulf has started to go back to normal. This week, almost 43 percent of the region’s crude capacity stayed confined, according to officials.

The crude oil price per barrel obtained some of its strength from Europe’s bond-buying program announcement from ECB President Mario Draghi, said Williams.

The central banker caused worldwide markets to soar after unveiling his plan to solve the debt crisis in the euro zone which has existed for almost three years now.

The European Central Bank will purchase sovereign bonds which will consequently lower the borrowing costs of financially stricken nations if they first seek a bailout and reach fiscal reform targets, said Draghi.

The current oil prices quickly increased following the news conference of the ECB president before starting to lose momentum. The market is basically a bit more positive about the rebound of the European economy, and that brings in a slight upward pressure on prices.

The announcement of the ECB also strengthened the euro versus the US currency, making the dollar-priced crude more appealing and, consequently, increasing demand.

Encouraging data of US employment on the eve of the much-anticipated official employment report for the month of August added to the firmness of the market.

By: Chris Termeer