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Streets paved with black gold

October 20, 2009 1:11 by Dana El Baltaji

The price of oil crossed the $80 a barrel mark in early trading in Asia on Tuesday, a new high for 2009. The rally was bolstered by positive US company results and the weak US dollar. However, rather than assume the price of oil will continue to rise, analysts are wary that the recent rally was due to a sudden boost in sentiment, rather than fundamentals.

“The possibility of the oil price running a little higher in the near term cannot be dismissed. However, at this point, we remain of the view that the oil price is most likely to correct lower by end-2009,” said David Moore at Commonwealth Bank of Australia in a note to clients.

JCB Energy analyst David Wech said in a research note:”We see little support for the rally, which is now eight days old, and think that at some point OPEC spare capacity of about 6 million barrels and massive on and offshore stocks will trigger a correction phase.”

OPEC Secretary-General Abdullah al-Badri also noted that oil prices were “a bit high.”

Oil prices rose by almost $10 a barrel since the beginning of October.

While the rise in oil prices may have been premature, we hope the price drops everyone is predicting won’t be dramatic.

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Tags: $80, Economy, Gulf states, IMF, oil price