Crude Oil Inventories Increase Yet Oil Continues To Climb On Growth Outlook

Each week we get fresh reports on Crude Oil Inventories. These reports measures the weekly increase in barrels of commercial crude oil held in inventory by US firms. This week inventories rose once again and still remain above the historical average.

The level of inventories influences the price of petroleum products, which can have an impact on inflation and other economic forces. For simplicity purposes, when inventories (or supply) increases, then the price of crude should technically head lower.

However, what we are seeing now in Crude Oil is that even with the higher inventory levels, Crude is continuing to rally on strong growth outlooks in China and other emerging markets. The bullish channel that it looks to be trading in will most likely remain intact as we close out 2010 and head into 2011. I think that Oil prices around $95 should not come as a surprise if we continue to get bullish growth news.