Oil prices continue falling despite an Energy Department report showing a drop in crude and gasoline supplies that suggests demand may be recovering. This could be because currently oil and gasoline in storage is much greater, attributed in part to a grim travel season. In this week’s report, gasoline inventories fell by 3 million barrels to 205.1 million barrels, a steeper decline than analysts had expected.
Standing at US$68 on the Nymex, oil has plunged almost five dollars in the first two days of the week on concerns that a global economic recovery this year would be slow and may not justify the big rallies in stocks and commodities since March. Both the energy and equity markets were weighing mixed signs about whether that the US economy is improving. The ADP National Employment Report said employment fell by 298,000 in August, the smallest drop since September 2008. The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index rose in August, indicating an expansion for the first time since January 2008. The National Association of Realtors said pending US home sales rose to the highest level in more than two years.