Oil Prices Move Closer to $91

The current oil prices increased to a little bit nearer to $91 per barrel as news of a slightly improving economy of the U.S. outweighed a huge rise in crude inventories.

In the early afternoon trading European time on the NYMEX, the U.S. benchmark crude for delivery in April was 37 cents higher to a crude price per barrel of $90.80. The contract shed 39 cents during the previous trading day to settle close to $90.43 a barrel.

The recently released report of the United States Federal Reserve showed that the economy in most of the country strengthened. The Beige Book report of the Fed showed that vehicle sales, increased employment and an ongoing real estate recovery aided the growth of the U.S. economy in the first two months of 2013.

Moreover, the weekly report of the Energy Information Administration of the United States said that the supplies of oil increased in the past week by 0.4 percent or 3.8 million barrels, a growth that is over three times higher than the expected increase of analysts. The country’s crude supplies are at a 30-year high and are higher by 10.3 percent compared to their levels last year. And at over 7 million barrels daily, the oil production of the United States is at its peak level since the late 90s.

The price of oil was also behind the equity markets’ latest developments, like the record high ending posted by the Dow Jones Industrial Average in recent weeks.

While the prices of oil moderately increased a few hours after the recent demise of Venezuelan President Hugo Chavez, markets are waiting to see if the subsequent government will seek to attract additional international investment in the country’s oil sector, and try to boost production.

Venezuela has the second biggest oil deposits in the world. However output and exports of oil to the U.S. sharply fell under Chavez.

Crude gained some support from a weaker U.S. currency, making oil less costly and a more appealing investment for traders holding other currencies.

By Chris Termeer