Oil Prices Move To Closer to Peak
Oil prices in New York today continue to climb; hitting $56 a barrel in afternoon trades. This comes after OPEC announced they will seek to raise the official production level by 500,000 barrels.
OPEC already produces more than the official ceiling so many experts feel this will go nowhere because, with the exception of Saudi Arabia, member nations don’t have much in the way of spare capacity to increase production.
Light sweet crude on the July contract traded up to the $56 mark, and then dropped down some to $55.55 a barrel. The prices had dropped to $53.05 at one point before the rapid ascent. Brent Crude from the North Sea was also trading up over $2 today moving to $54.77. Gasoline was trading up 2 cents to $1.56 a gallon.
While OPEC tries desperately to regain control of the oil market, speculators keep slapping them down as crude edges ever closer to the high back in early April of over $58 a barrel and many experts figure crude will crack $60 before the end of the summer. At this rate, it may be before the end of June.
A lot of issues have to be considered in the price of oil. First is supply and traders are terribly nervous about supply. With political instability in Nigeria, Venezuela, and Iraq, capacity questions with much of OPEC, Russian oil company problems, they have much to be nervous about. If one problem occurs, say a hurricane in the Gulf of Mexico, then supply become problematic at best. If a refinery goes down, which they have, once again, a supply problem.
Oil refineries are pumping at near full capacity of over 96%, OPEC is pumping at near capacity. There’s also a shortage of distillate fuels. There were increases last week but gas and oil inventories went down. Where do the prices go from here?
John Stith is a staff writer for WebProNews covering technology and business.