This week we saw the price of light sweet crude oil approaching $80 a barrel.  This trend continued until the Department of Energy released their report on gasoline and oil inventories yesterday.

As the news spread that inventory levels were high, the price per barrel began to take a nose dive. Oil reached $80.41 a barrel on Tuesday before dropping to a one month low today low at $75.68.

There are many factors that have an influence on the price of oil.  With a slow economy comes a weakened demand for oil products. As the demand weakens, supply levels increase and ultimately drive down the price of crude oil.

On the flipside the dollar began to stabilize and is actually showing a slight upward trend as oil prices fall.  The dollar and crude oil prices have an inverse relationship: As the price of oil falls the value of the dollar usually moves in the opposite direction.

What direction will light sweet crude oil prices head to, as we approach the winter months? Well Merrill Lynch believes that the 2010 Clc1 price will reach $85 per barrel – up from their previous forecast of $75.  They believe that the economy is recovering faster than expected and should cause a greater demand for oil products next year.

Oil is currently trading at $76.49 a barrel.

Get your up to date commodity prices by visiting Healthy Financial Habits daily. Here you will find the latest news and information on commodities such as gold and oil.

Author: John Zinsky