An unexpected drop in the U.S. oil inventory was given as the reason for oil futures increasing to new highs again today, as in intraday trading it rose as high as $112.21 for an all-time record, while it also closed at a record high of $110.87 a barrel.
While there is some truth to that, there is just as much, if not more, increase from the speculators driving up the prices as a hedge against inflation and economic weaknesses.
"Fundamentally, there's no reason we should be at these levels. Speculation has definitely taken over this market," said GRZ Energy trader Anthony Grisanti. "I think $120 is right around the corner. There is nothing that can turn this market around at this point."
Unsurprisingly, the report from the Energy Information Administration that oil inventories had dropped, helped energy stocks like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) climb higher. On the other hand, some airlines and retailers' stocks plunged on the news.
Gasoline prices also increased by 1.2 percent, reaching a national average of $3.343, according to new data from AAA and the Oil Price Information Service.
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