Oil prices closed at $71 today after getting close to the $72 a barrel price.  Economists say that increased demand is impacting the inventory of oil which in turn is increasing the price.  Expectations are that the price could go to $80. But on the contrary side, a higher price of Oil could stabilize or reduce oil demand, and the resulting price of Oil may not go higher.

The price of a barrel was around $45 at the beginning of 2009. After almost six months Oil has risen over 50%. This kind of increase could jeopardize the US recovery depending on what happens in the future

Comment:  Look for oil prices to eventually rise as producers reduce the amount of oil they pump.  They liked oil at $140 a barrel and will want to get back to that level eventually.

At the beginning of the year, OPEC producers felt confident that strong economic growth and tight supplies would keep oil prices high. When oil crossed the $100-a-barrel threshold in February, the cartel’s president blamed speculators and said there was not much OPEC could do.But now, panic is gripping producers as prices drop. Oil is down by half since July, and the speed of the decline has stunned oil-rich governments that have become dependent on high prices.
Continue reading ‘OPEC faces tough test as oil price tumble’