Oil Prices Hit Records and Are Expected To Get Higher
Oil prices reached record highs yesterday with crude going up $1.89, or 3.3%, to $58.47 a barrel. Futures reached $58.60 a barrel. The previous record was $58.28 in April.
“Going over $60 will require a catalyst,” said Jason Schenker, an economist at Wachovia. “A major event such as a hurricane, massive crude-oil inventory draw, or destabilizing geopolitical event will be needed.”
Oil prices have gone up 9.2% over the past week, and 52% over the past year. Gas prices are expected to remain at over $2 a gallon all summer long. As AP reports,
OPEC failed to soothe the market earlier this week when it agreed to raise its daily output quota to 28 million barrels a day because its members already had been unofficially exceeding that level.
Including Iraq, which is not bound by the 11-member cartel’s quota system, the Organization of Petroleum Exporting Countries is pumping close to 30 million barrels a day, or about 35 percent of global demand.
If prices don’t go down, OPEC says it will consider an increase of 500,000-barrel-per-day. OPEC as well as many analysts blame the high prices on lack of refining capacity around the world.
“We will definitely hit $60,” said Fadel Gheit, a senior oil analyst with Oppenheimer & Co. “The question is how much higher and for how long.”