Oil prices leapt beyond the $55 mark today debate over reasons continue. With demand expected to reach 85 million barrels a day world wide, speculation on where oil prices will hit a ceiling remains high.
With OPEC producing at near capacity and spares at 1.5 million, global consumption continues to grow with the United States and China being the most thirsty. OPEC ministers have begun to worry they won’t be able to control prices much further based on production their stated production levels.
Inventories for both crude and gasoline are up over last year in the U.S. yet gas futures continue to climb. The reason for this comes from a couple of sources. First, refineries in the U.S. have had a number of maintenance problems. This could lead to shortages during the summer travel season. Valero Energy chose to slow production for maintenance issues. The ConocoPhillips facility in Louisiana has been down for a week now and will be down for another week for unscheduled maintenance.
other source could be a worldwide rally as suggested in a recent AP story. James Cordier, president of Liberty Trading Group in Tampa, Fla., disagreed. He said U.S. supplies of both oil and gasoline are “more than ample” and that the stubbornly high price of crude reflects broader concerns about demand growth in China and the ability of OPEC to keep up.
“This is a global rally,” he said. “If we were just to focus on U.S. inventories, we wouldn’t be at $55.”
Unfortunately for the consumer, this is all quite maddening as they try to plan budgets and vacation plans for the summer.
John Stith is a staff writer for Murdok covering technology and business.
