Commodity Daily News

Spot Crude Oil Prices Plunge below $80 a Barrel

Spot crude oil prices fell for the second consecutive day. Causing this drop were positive weather forecasts and the Chinese decision to require its banks to carry higher levels of reserves. This comes just two days after data showed a large rise in Chinese imports. The Energy Information Agency (EIA) also released its price expectations for this year and 2011.

Crude oil prices were trading lower by 2.5%, at a price level of 79.83 after opening the day at $81.87.

Colder than normal weather may have been a factor in the recent run up of crude oil prices. An expected pause in the cold weather for the U.S. may help explain the abrupt about-face crude oil prices have taken the past two days.

A report released today by the EIA contained the government agency's price estimate for crude oil. U.S. crude oil is forecasted to average $79.83 this year, an increase from the previous expectation of $78.67. In 2011 the agency expects prices to average $83.50.

Today the EIA will also release the weekly crude oil inventories report at 15:30 GMT. Crude inventories are expected to grow by 1.4M barrels. This report could provide the fundamental support crude oil prices need to bounce above the $80 price level once again.