Oil Prices Head For New Record: Climbing Beyond $58
Light sweet crude continues to climb on the New York Exchange, hitting $58.15 during midday trading. Breaking the record $58.28 set back in early April seems inevitable at this point as prices continue to climb with no end in sight. Gas prices are no better today. Gas opened at $1.62 today and up to $1.65 on the midday.
The latest major issue is OPEC member nation Nigeria. Germany, the U.S. and the U.K. both closed their embassies in Nigeria for unspecified security concerns. Nigeria is the largest producer in Africa, the 11th largest producer in the world and the 5th largest source of U.S. imports. Nigeria produces nothing by light sweet crude, considered the best product for refining gasoline and distillates.
This may be the catalyst needed to put oil up over the $60 mark, which could come as early as next week. In looking ahead at other contract after July, August is running at $58.50 and September is running at $59.05. These prices per barrel don’t bode well for consumers in the U.S. or anywhere else for that matter.
Right now, the oil supply is stretched so tight; the slighted change could send it flying. OPEC currently pumps at all out with no real production capacity left. Any additional capacity will be required to alter the pricing structure and at the moment, it’s just not there. A million barrels a day will hit in August from the new Caspian Sea pipe but that’s still a couple of month away.
One big problem area in world oil demand remains Russia. The legal issues with the largest Russian Oil company, Yukos, have permeated the energy environment over there and to be honest many oil companies are certainly hesitant about getting involved in fear of getting on President Putin’s bad side and the Russian legal system stripping them clean.
Some refinery problems have surfaced and while they won’t dramatically alter production anywhere, the persistence of various problems adds to the frenzy of being able to handle demand in the coming month, namely the fourth quarter.
Many were relieved when the EIA released their distillate figures on Wednesday but the traders just shifted their frenzy to gasoline stocks.
Some economists continue to say that oil pricing is a bubble and will soon collapse but most say that because of both bottlenecked refinery issues and incredibly tight demand, the prices will continue to climb perhaps even cracking $100 a barrel in the future.
John Stith is a staff writer for WebProNews covering technology and business.