Crude Oil Prices Fall – End Of March 2010

Crude oil is a good indicator of how the economy is doing. When people have to spend more money for gas, they spend less money elsewhere. The economy needs people spending money, and one of the biggest reasons for the recession was the failing of the Big Three automakers who suffered horribly when oil prices began to shoot up. Right now oil stands at $81, a drop from where it was the previous week.

Oil Prices go down again

Last week oil was sitting at $83 per barrel, but with the supplies of oil jumping up, oil prices fell to $81. The U.S. government reported that they had a larger than expected jump in the inventories of crude oil. The crude for May delivery also fell by $1.30 to $80.61 per barrel on the New York Mercantile exchange. While this is low, it is better than the $79.88 it was at earlier.

According to the Energy Department, crude oil inventories were up by 7.3 million barrels to 351.3 million barrels over the last week. This was a much larger increase than was expected. Economists had expected an increase of only 1.67 million barrels.

Oil supplies have been rising

Over the past few weeks, oil supplies with in the United States have risen continually. This has helped to create a slow overall economic recovery, but this also shows that consumer demand is weak considering how slow the growth in the economy is.

With Portugal reporting it is having troubles with debt; it means that the country will be paying more in interest on oil, which causes higher taxes for the country. This creates less money for the citizens of the country to spend on other areas that would help the country improve its economy.

On the Nymex trading in April, gasoline prices fell by 4.17 cents to $2.2211 a gallon. Heating oil fell by 3.111 cents to $2.0707 a gallon, while natural gas dropped by two-and-a-half cents to $4.105 per 1,000 cubic feet.

There is no way to predict future oil prices

As for how things will go in the coming weeks, only time will tell but the summer season is approaching and oil prices could see a big jump when supplies dwindle. Vacationers use a lot of oil and gas, and that can cause the supplies in America to fall, which then drives up the cost of oil. It’s all about supply and demand.

Oil prices fell by about two dollars to settle in at $81. This is probably not a sign of a long-term trend to lower prices though. As the months go by, we should see the price of oil increase, with less money going to other purchases as a result for individuals. People need to pay for gas, and gas takes precedence over other retail purchases.

Further Readings:

After effects of Recession on US Economy

Can GM revive its dominance in Automotive market