US Energy department reported a decrease in Crude OIL inventories of -2.3 million barrels, way below analysts’ expectations of +70,000 barrel this week.

Light sweet  crude June-delivery rose by 4 US dollars from yesterday’s lows hitting $109.75 a barrel on the New York Mercantile Exchange.  Technically, OIL prices have been bullish since mid February this year due to several factors.  Suspension of OIL Libyan oil production as a result of geopolitical tension in North Africa helped push the prices higher. Middle Eastern tension and Nigerian on-going violence has raised global fears that there will be quality OIL shortage.

Weaker greenback also played an important role in pushing OIL prices higher.  Fundamentals also helped also support Crude bullish trend. Prices started rebounding after Treasury Secratry Timothy Geithner was quoted saying there was no risk the United States would lose its AAA credit rating, which was considered economy-supportive.

That’s being said, OPEC secretary General Abdullah Al-Badri comments saying that there is no shortage in OIL failed to lower the pace of rising prices.

Several analysts say that we may see a new OIL bubble forming quickly, and only the World Economy status will hint to when it will burst.

Written by

Ioannis Gerousis, Chief Dealer, ACFX.COM