Oil Prices Rise

Despite the recent decline in demand due to slowing economies, oil prices are being driven up:

Yesterday, crude reached a five-week high because of the conflict between Israel and Hamas, Russia’s gas dispute with Ukraine, and signs that OPEC members are enacting supply cuts. It later fell as manufacturing data indicated the U.S. recession is deepening.

Crude briefly surged to $49.09 a barrel today as the International Energy Agency said it is “very concerned” about the escalation of the gas dispute between Russia and Ukraine and urged an immediate restart to European supplies.

Iran, the Middle East’s second largest oil exporter, will trim exports to two refiners in Asia in February, officials from the companies said today, to conform with OPEC’s Dec. 17 decision to curb supplies. Other members including Kuwait, Qatar, Libya and the United Arab Emirates have given similar notices.

For some reason oil prices seem to be on my mind today. First thing this morning I wrote a post on stimulus packages, asphalt, the price of oil, and unforeseen secondary effects over at The Glittering Eye.

FILED UNDER: General, , , ,
Dave Schuler
About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging. He has contributed to OTB since November 2006 but mostly writes at his own blog, The Glittering Eye, which he started in March 2004.

Comments

  1. Rick DeMent says:

    For some reason oil prices seem to be on my mind today.

    For some reason? it’s because OPEC decided to twirl back the tap. They set prices. It is also a grand reminder of the utter cluelessness of the “drill here, drill now” meme. At least as far as lowering gas prices go.

  2. Steve Plunk says:

    Rick, I’m curious why expanded exploration and development proponents would be clueless.

    I also wondering what effect the storage of oil in tankers is having on the market. We’ve accepted the role of speculation in the sudden rise last spring and summer and now it seems speculators are parking their oil offshore and waiting for prices to rise before delivery. There are 25 supertankers off Europe and traders are looking to lease another 10. This represents about a five day supply for Europe and could clearly impact prices. We also know there are tankers being used to store Iranian oil and tankers off the gulf coast storing oil.

    This looks to me like market manipulation by those with the resources to get it done. there’s no doubt OPEC’s supply cut will have an effect but we still are feeling the sting from speculators who game the system.

  3. Steve Plunk says:

    With higher domestic inventories reported oil has fallen today better than 10%. I expect it to be down more as traders liquidate positions. Let’s watch and see. This isn’t fun and it surely dampens consumer confidence which slows the recovery.

  4. Oil prices tumble below $43 on oil reserve report
    US oil inventories continue to rise amid falling demand, sending oil below $43 per barrel

    So you start worrying about oil prices hitting a “5 week high” at $49.09 and we immediately see prices drop to $42.63. A nice 13% drop. Can we suggest some other topics for you to worry about?

  5. Drew says:

    In back to back sentences Mr Dement observes that restrictions on OPEC supply increase prices……but then scolds anyone with the audacity to suggest that pursuing increases in alternative supplies is a sensible approach to offsetting that price pressure or the OPEC monopoly.

    Now THAT’s entertainment.

  6. markm says:

    So you start worrying about oil prices hitting a “5 week high” at $49.09 and we immediately see prices drop to $42.63. A nice 13% drop. Can we suggest some other topics for you to worry about?

    But…do continue to worry about oil at the same time please.

  7. RC4B says:

    What should worry you is that oil producers world wide are already cutting back capital investment, and in many cases staff. The pendulum swing from $140 per barrel oil to $40 per barrel oil is huge, and affects long term investments that are the nature of the energy business. This puts huge pressure on attempts to move consumers to renewable energy, while at the same time prepping the oil industry to be delay investment that will mitigate high prices by increasing supply. Will we see another wild price swing when the world finally starts to move out of recession?