Crude oil futures rose to $109.50 intraday but eventually turned south in spite of another decline in inventory. The weekly Wednesday oil and gasoline inventory numbers showed a 1.5 million barrel draw down in crude oil supplies and a 5.9 million barrel drop in gasoline stocks.
Today's big news was a victory for the "drill, baby, drill" crowd. After twenty-five years Congress let a moratorium to ban drilling off the Atlantic and Pacific coasts expire. Both houses of Congress had been working furiously to pass some form of legislation to set policy for drilling the outer-continental shelf and there were at least three bills being battered about. The ban was set to expire this week and it looks like the moratorium is being removed as part of the government-spending bill, which is expected to pass before Congress recesses ahead of the national elections. The U.S. Department of the Interior has set estimates as high as 18 billion barrels of recoverable oil off our East and West coastlines. Of course it will be eight to twelve years before we actually see any new production from the outer-continental shelf. We'll be living in a very different world by then.
Tomorrow could be another quiet day for stocks and oil. Everyone is waiting to see if the government's $700 billion rescue plan for the financial system will advance. President Bush addressed the nation tonight regarding the bail-out and expressed his belief that if Congress doesn't act fast to approve this plan it could leave the nation facing a very deep and very long recession.
The U.S. dollar bounced on Wednesday marking its second gain in a row after a significant sell-off. Strength in the dollar is putting pressure on commodities like gold and oil. It looks like the short-term trend will continue with the dollar inching up and commodities inching lower.