By Natalie R. – After dropping below $72 a barrel overnight, to an 11 week low, crude levels rebounded slightly in today\u2019s early trading ahead of the release of U.S inventories data later today that is predicted to show a modest gain in gasoline supplies.\u00a0U.S inventories report is a weekly indicator that shows the change by barrels of U.S crude oil levels as well as gasoline and distillates such as heating fuel. A distinction is made since it is important to measure not only the level of the unrefined oil available but also its byproducts, as these are better indicators of demand.<\/p>\n
Analysts expect crude inventories to post a modest 300,000-barrel gain, according to a survey by Bloomberg. According to a survey by Dow Jones Newswires, gasoline stocks are expected to fall by 500,000 barrels, while inventories of distillates, which include heating oil and diesel fuel, are seen rising by 900,000 barrels.<\/p>\n
This expectation is in line with the recent slowdown in economic recovery in the U.S. High unemployment and concerns about the economic recovery have had a major impact on demand for oil and fuel products. Oil prices dropped significantly yesterday after the release of worse than expected housing data. Oil lost 5.5% in the previous five days amid concern the global economic recovery would stall and curb fuel demand. Consumers have cut trips and other expenses, leaving the market saturated with gasoline during the important summer driving season. Along with the winter months, the summer is regarded as a period where demand increases due to increase in gasoline consumption. This summer season, however, proved to be highly disappointing as demand continued to decline. Despite declines in the level of Crude Oil, there was a continuous rise in distillates levels, causing oil prices to drop.<\/p>\n
As there is abundance of supply available in the markets, oil levels are mostly determined by demand. The current pessimistic mood brought on by the recent surge of negative economic data has greatly dampened expectations of increased demand, dragging down oil prices. There will need to be a significant change in stockpiles to influence the pessimistic outlook. More importantly, the change will need to be not in the crude level but in the distillates, namely gasoline and fuel levels.<\/p>\n