Oil Prices Soar Again
March 7, 2008
Last Wednesday saw oil prices around the world soar again. This time, the oil price almost reached the $105 per barrel mark. This is the first time that oil prices have risen this high. The increase in price came soon after a report from the government that showed that there was an unexpected dip in the oil supplies to the nation. However, the main reason for the steep hike in the oil price was due to the announcement made by the OPEC which said that they would not be increasing oil production.
In the US, the price of light crude for the month of April was at an all-time high of $104.52 a barrel which was almost $5 up from the previous day. This new hike made it the highest value overtaking the earlier settlement high of $102.59 which was set only last week. Once the settlement was made the oil prices skyrocketed to $104.95 which was the highest ever intra-day high for oil, the previous high coming after a settlement was $103.95 per barrel.
The Energy Information Administration said that crude stocks had fallen by almost 3.1 barrels in the previous week. This was at the same time as analysts were expecting a rise by of around 2.3 million barrels as per a poll conducted by Dow Jones industrial average.
The recent and unexpected hike in oil prices is said to have occurred because of fog in the Gulf Coast area last week, which slowed oil delivery. Some oil might have been lost in the fog, according to analysts, though they had not expected the fog to create any impact on the supply.
Another factor which greatly contributed to the rise in oil price was the decision which was made by OPEC on Wednesday. OPEC, during its meeting in Vienna, Austria, said that they would not be increasing the price of crude oil further than the present levels of production. According a member of OPEC, the decision was made by the body because the demand for oil had weakened by a considerable margin and because they were expecting further decrease in the demand.
However, this idea was hard to sell amongst many analysts who believe that OPEC had come to such a decision solely based on the demand factor. They feel that OPEC is more concerned about the oil prices than they are about selling oil. Analysts have agreed that they could not comprehend the move from OPEC, as maintaining the price of oil at more than $100 per barrel is only going to decrease the amount of oil they will sell.
The decision of the oil Cartel came in spite of the request the U.S. president had made to them asking the commission to take into account the impact that the high price of oil is having on nations worldwide.