Oil: US Drivers Go Slow, Venezuela Reserves Grow And SUV Market Falls
THE International Monetary Fund says “inflation concerns have resurfaced after years of quiescence”.
Why? Because food and energy is getting more expensive, that’s why.
Just look at the crude oil market shoot for the stars. The price of crude has reached a record of almost $124 a barrel – that’s a rise of 99 per cent in the past 12 months.
Since the Federal Reserve rate cut in January, the piece of US crude has risen by 37.5 per cent. Most analysts think there are more rises to come.
New York’s benchmark oil futures contract, light sweet crude for June delivery, closed up 16 cents at an all-time high of 123.69 dollars a barrel Thursday.
Punters looking to secure themselves against rising cost should consider taking a buy on Brent and US crude.
There are concerns in the U.S. that oil supply may be insufficient to meet peak demand during the summer driving season.
“People are more focused on the idea that we may have more demand than we expected,” says Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore on Bloomberg. “That’s going to be a big problem with the refinery runs being as soft as they are for this time of year.”
The US Energy Department says that refineries operated at 85 percent last week, down from 89 percent a year earlier.
Americans are feeling the pinch. The market for big cars is falling and there are reports of drivers going slow to conserve fuel.
So the price of oil will keep going up , unless more can be brought to market.
As reported, Venezuela’s proven crude oil reserves had swelled to 130 billion barrels as of late April, says energy and oil minister Rafael Ramirez.
Ramirez, who also runs Venezuela’s state oil giant Petroleos de Venezuela SA (PDVSA), says: “As of April 2008 we have increased by 30 billion barrels of oil our additional proven crude reserves” north of the Orinoco River, Ramirez said.
Venezuela’s new estimate of oil reserves puts the country in second place behind oil-rich Saudia Arabia in the league of countries controlling the world’s biggest reserves.
Can the US get easy access to their producers, or will it be squeezed?
On the Tradefair binaries, punters are erring on a buy on June futures.
Its looks like the commodities boom might not be a bubble. It might last. It might be the way of things to come.
But will it all lead to a return to the dark days of the 1970s, when rising oil prices led to rising inflation?
And will interest rates need to come down further to encourage the consumer to keep on spending?
Punters thinks there will no change in rates at the bank of England’s MPC meeting, with 95% advocating a buy on the binary market at 95%.
But is sticking an option?
Posted: 9th, May 2008 | In: Money Comment (1) | TrackBack | Permalink
