Oil prices have steadied around record highs of US$111 a barrel. Oil prices peaked to a new record on release of the US Energy Information Administration's inventory report that showed a fall in crude stocks last week by 3.2 million barrels. Gasoline and distillate supplies including diesel fuel and heating oil fell more than expected, while gasoline inventory levels remained healthy.
The drop is in sharp contrast to the 2.4 million barrels increase expected by most analysts. Last weeks drop in crude supplies can also be attributed to a sharp drop in imports over the same period.
A pessimistic report by the International Monetary Fund that said the US is headed for a recession, dragging world economic growth down along with it is also playing on oil prices. Generally bad economic news means bullish movements in oil. A weaker dollar attracts financial investors to oil and other commodities as a hedge against inflation.