Oil futures have hit a new all-time high, due to OPEC maintaining their production quota, an attack on an oil facility in Nigeria and an attack on a oil tanker in the Gulf of Aden. I am not sure that these events are really driving the oil market, per se. It seems that the market is looking for any reason to run oil higher. From a Bloomberg News story:
``The price seems to be rising inexorably towards $120,'' said Bill Farren-Price, director of energy at London-based Medley Global Advisors. ``OPEC has a very limited amount of spare capacity left and maybe they're trying to keep that in case there's actual physical disruption.''
Granted oil supplies are limited and demand has/will increase due to growth in China and other countries, but it seems that oil and other commodities are getting ahead of themselves. As prices increase they will eventually reach a point that they will reduce demand and undercut their price support. Again from Bloomberg News, OPEC president Chakib Khlelil was quoted as saying the if OPEC nations increase their output, they 'will not find people to buy the increment.'
With the increase in oil prices, gasoline prices have also increased. For the week that ended on April 18th, a gallon of gas cost $3.4737, up 15.66 cents. Trilby Lundberg is quoted as saying, "(i)f crude oil prices do not retreat, then we will see somewhere between 10 cents to 30 cents rise in the retail price of gasoline, probably in the next few weeks,"
How much longer will the average US consumer be able to handle these price increases? What is left for them to cut back on?
Source:
'Oil Rises to $117 Record on Nigerian Supply Cuts, OPEC Stance' by Grant Smith, Bloomberg News
'Drivers paying record pump prices', by Chelsea Emery, Reuters News
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