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Oil Fails to Rise Despite Decreasing Inventories

March 20, 2013 at 15:42 by Andriy Moraru

Crude oil contracts are currently trading near their opening levels as the markets are torn by uncertainty regarding the bail-out measures for the faltering economy of Cyprus. Declining inventories in the United States turned out to be of little help to the oil bulls.

The crude oil inventories report for the week ending March 15 has shown an unexpected drop of 1.3 million barrels, while the market participants expected an increase by 1.8 million barrels. Such a huge gap between the actual and forecast values spurred only a short lived upward movement in Brent and even a less notable spike in Light Sweet grade.

Attention of traders is drawn more closely by the events and rumors surrounding a small European island nation, which is struggling to fight its fiscal troubles. Cyprus parliament has rejectedbank-deposit levy. Now, both Cyprus and eurozone policy makers will have to come up with a new plan to bail out the nation’s economy and instill confidence into investors’ minds. Additionally, commodity traders await possible signals from the Federal Open Market Committee meeting, which ends today in less than three hours.

Light Sweet grade of crude was trading at $92.73 per barrel as of 15:38 GMT on NYMEX — up from $92.67 yesterday close. Brent gained from $107.43 to $108.03 on ICE today.

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