Monday, March 31, 2008

Crude Oil Plunges Over $4 on Expected Supply Increase

Analysts surveyed by Bloomberg News believe the oil inventory in the U.S. will increase for the 11th time over the last 12 weeks.

Others believe the same, as the release of the U.S. report on Tuesday is expected to reflect that reality, and the market agreed, with crude oil plunging by $4 a barrel on expected weakening demand.

The average response by Bloomberg analysts was that the U.S. supply of crude oil has increased by 2.25 million barrels as of the week ending March 28.

"We're expecting that this week's Energy Department report will show crude supplies are still building as demand slumps," added Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago.

Another indicator seems to point to lower demand, as refineries operated at their lowest level in almost three years, falling to 82.2 percent.

Gasoline delivery for April declined by 10.07 cents, dropping by 2.7 percent, to close in New York at $2.6163 a gallon.

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