The last day of the June contract saw oil prices drop in afternoon trading as Fed Chairman Alan Greenspan says better technologies will come around.
Light sweet crude dropped to $46.55 a barrel in afternoon trading in New York and gasoline futures remain steady at $1.43 a gallon. These prices come after a swell in U.S. petroleum stocks for 13 of the last 14 weeks.
Greenspan said he predicted back in April during the price spike oil stocks would climb and create “an inventory buffer to damp the price frenzy.” U.S. inventories grew 4.3 million barrels to 334 million and gasoline stocks rose 1.1 million barrels to 214 million. Many experts feel the market is well supplied as OPEC pumps at its highest levels in over two decades. OPEC has the pumps wide open at 30 million barrels a day and state emphatically that they can pump a lot more.
”I stand here to tell you that Saudi Arabian reserves are plentiful, and we stand ready to raise output as the market dictates,” Naimi said at an energy confidence in Washington on Tuesday.
Greenspan, addressing the Economic Club of New York suggested that in order for the U.S. to remain economically sound, the nation must try and veer away for oil consumption as the thirst for oil worldwide continues to increase, particularly in China.
“China consumes roughly twice as much oil per dollar of GDP (gross domestic product) as the United States and if, as projected, its share of world oil consumption continues to increase, the average improvements in world oil-intensity will be less pronounced than the improvements in individual countries viewed separately would suggest,” he said.
Greenspan also said oil inventories continue to climb in other countries, although not as significantly as in the U.S. He also said the real key was that as prices remain high, technological development of alternatives to the current consumption levels will happen, it could just take a while.
John Stith is a staff writer for Murdok covering technology and business.
