Why is crude oil on the rise?
Posted Dec 7, 2010 1:54 pm.
This article is more than 5 years old.
The recent rise in world oil prices is a bit of a head scratcher.
Randy Ollenberger with BMO Capital Markets in Calgary tells 660News, it looks like investors have again found their appetite for risk.
“They’re feeling like taking a little bit more risk on, and betting perhaps more on on global economic recovery,” says Ollenberger, “we see them move into oil. I think what that’s done is driven up the near-month price.”
However those who have been stocking pile oil will likely try to sell those reserves soon, which will help push the price back down.
“People who are speculating on oil prices continuing to rise,” adds Ollennberg, “may get a little bit discouraged by inventories coming into the market and sort of slowing the ascent” (of oil prices). “We’re looking at very high inventory levels, globally, and OPEC’s bare production capacity of around six million” (barrels) “a day, compared to rougly three million a day the last time oil prices peaked.”
Ollenberger says it’s possible oil could hit the $100 mark soon, but the economic activity is not strong enough to keep it in the triple digits for long.
Oil hit a two year high early Tuesday when it traded above $90 U.S. a barrel for a short time.
