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.”
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.”
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
