Oil futures are rising again to over $98 a barrel as concerns surface about geopolitical stability. Traders are looking to U.S. supply reports to see if there are signs of improving demands.
The Wall Street Journal reports that “light, sweet crude futures for January delivery were up $1.55, or 1.6%, to $98.47 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange was up $1.57, or 1.5%, to $108.45.”
On Monday the U.S. announced new sanctions against Iran that addressed the country’s financial and oil sectors in a response to its nuclear weapon goals.
“The sanctions prohibit the sale of goods and services to Iran that aid its petroleum production, as well as impede the nation’s banks ability to do business around the world. Several western countries, including France, the U.K. and Canada, joined in supporting the penalties,” reports The Wall Street Journal.
The new sanctions have created a lot of concern. According to the U.S. Energy Information Administration, Iran is the world’s third largest supplier of crude oil, exporting 2.2 million barrels a day. Iran is not a direct supplier to the U.S., but it is feared that if removed from the global “portfolio” Iran would then restrict the available supply. Russia was fully against the U.S. sanctions.
NPR reports that “The American Petroleum Institute is scheduled to report later Tuesday crude inventories data for last week. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., are predicting crude levels were unchanged.”
Some analysts are predicting that we will see oil prices go higher as the U.S. economy increases.
“We are still in the midst of a slow economic recovery and as demand finds its way back to pre-recession levels, so will oil prices,” energy trader Blue Ocean Brokerage said in a report, according to NPR.
In July 2008 crude oil sky rocketed to $147 a barrel then dropped to $32 later in the year as the global recession hit.
The oil market is being kept tight because of “Rising demand for fuel from China and other emerging economies, “ and from “declining output from traditional suppliers including the North Sea and interruptions to production in key exporters such as Libya,” reports Reuters.
Reuters says that unless the U.S. falls into another double-dip recession, it is likely oil prices will continue to remain high at least until the winter months are over.
Until next time,
Cori
