Oil price goes up again
February 26, 2008
The oil prices on the 25th of February went up higher to reach almost $100 for a barrel. The increase in oil price led to a hike in the gas price as well. The gas price went up by almost 2 cents in the last 2 weeks. The gas price on Friday went up to such an extent to become the highest in the last seven months.
The ongoing increase in oil price has already resulted in the gasoline price going up by 2.2 cents for a gallon. The analysts of the economy are expecting gas prices to be somewhere around $3.75 and $4 by the time spring arrives. The current national average of $3.137 is the highest since the month of June 2007. The rise in gas price that is going to happen in spring is going to be a record growth. The Energy Department is predicting the gas prices to reach its highest level of $3.40 per gallon in the coming spring.
However some other experts in the field are of the view that this steep hike in price of gas is solely because of record growth of oil price which even touched $101 a barrel in the previous week. They also feel that the inventory levels at a decade high will not be able to sustain this kind of a price. They say that even though the prices are at a record high at the moment the inventories are not tight enough. They believe that the gasoline market in the country is right now facing bear market conditions.
They say that the gas inventories have been accumulating on a continual basis throughout the last 15 weeks. This is mainly because the demand is usually weak in the winter season. But the fact is that the demand this year has been weaker than the previous year which contributed to the speed at which these inventories are getting accumulated.
The price of crude oil for the month of April went up by 24 cents to $99.05 a barrel in the New York Mercantile Exchange. Earlier the price had gone as high as $99.70 per barrel as a result of supply concerns. These supply concerns were heightened by the rumors of a Turkish incursion into the northern parts of Iraq and warnings by Iran against more international sanctions.
Another factor which creates volatility in the market is that many investors have invested in crude oil. These heavy investments have been made in the belief that the price of crude oil will continue to rise. The price of crude oil went up in Europe as well. The price was up by 52 cents to become $97.53 per barrel.
In other areas of trade, the price of heating oil went up by 1.8 cents to become $2.7810 for a gallon. Natural gas on the other hand lost 3.1 cents to become $9.115 per 1,000 cubic feet. It is believed that this was just a temporary drop and that it will be up in the next 2 days.