Light sweet crude prices continue to climb hitting $52.30 a barrel in midday trading amid speculation OPEC won’t be able to keep with rising oil demand in second half of the year.
The U.S. Dept. of Energy announce on Wednesday that oil and gasoline inventories were continued to grow and oil dropped below $49 a barrel briefly but prices rallied and are on their way back up. Brent crude from the North Sea also climbed up 50 cents today trading at $51.64 and gasoline futures are up 2 cents to $1.50 a gallon.
“The lows forged this week will manage to support prices as the current correction runs its course,” Mike Fitzpatrick, energy analyst at Fimat told Investor.com. “Certainly this morning’s jobs number…will be taken by some as a sign of a robust economy that could generate considerable energy demand.”
The Labor department announced over a quarter of a million new jobs were created in the last month but unemployment remains the same at 5.2%. This also doesn’t bode well as the summer driving season starts at the end of May on Memorial Day weekend.
Kevin Norrish, the head of commodities research at Barclays Capital in London, told BusinessWeek, that over the next few weeks U.S. gasoline prices “are going to fall, which means we’re going to see increased demand.”
All of this builds into fears of rising inflation in the U.S. and the FED increasing the interest rate by .25%. GM reported over $1 billion in losses and GM and Ford both got busted down to junk bond status by S&P mainly because of severely declining sales in the SUV markets caused mainly by high consumption of gasoline with its rising prices.
China, the second largest consumer of petroleum also shows continued growth and an increase in consumption of oil. India also continues to grow, which, with China, are a main reason for fears OPEC won’t be able to pick up the slack in production.
It’s really quite interesting to see how interconnected all this is.
John Stith is a staff writer for Murdok covering technology and business.
