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Streets paved with black gold

Streets paved with black gold

Oil prices broke the $80 barrier this week. Is it too early to be optimistic about the region’s recovery process?

October 20, 2009 1:11 by



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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1 Comment

  1. Carlo on October 26, 2009 12:40 pm

    Dana, how about the Dirham inflation? Nobody is talking about, but the exchange with the Euro is close to its historical record (5.8) and has been raised constantly since March. Why don’t you write about it, I’m sure a lot of reader, who’re paid in USD/AED are suffering about it!

    And the article would be more interesting with a couple of “if-what” scenario, foreseen the oil price at a very high and low levels and try to speculate on the consequences.

     

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