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Will Growth of US Crude Oil Inventories Reduce Demand?

December 30, 2010 at 2:31 by Vladimir Vyun

Crude oil dropped from the 26-month low on the speculation that US inventories will grow in January. All of each past four years showed an advance of crude stockpiles in January. Tomorrow’s report expected to show a decline of inventories as refineries delay delivery until the start of the next year to reduce their tax bills.

Demand for oil may decline because of high prices. Another reason for a drop may be slower economic growth in the US. The Conference Board Consumer Confidence Index decreased to 52.5 in December from 54.3 in November, showing that US consumers are more pessimistic about future of the economy.

February delivery for crude oil declined $0.37 to $91.12 per barrel on NYMEX. The price touched $91.88 on December 27th, the highest level since October 7th, 2008. The prices have risen 15 percent this year.

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