Monday, September 27, 2004

Oil prices jump to record high

Guardian reports:
Extremely high demand and short supplies have been exacerbated by other factors - including increasing insurgency in Iraq - that have increased concern over the amount of oil available to meet winter demand.
...The Opec president, Purnomo Yusgiantoro, said the cartel was supplying enough crude oil to the market, and current prices were not due to any market imbalance. "This is because of hurricane Ivan and some problems in other places," he told reporters. "This is not a supply and demand problem. Opec supply is enough."

There are many things at work here. everything from Iraq, to Yukos in Russia to Hurricanes in Florida are being blamed for the oil prices inching up. Such causal relationships may not necessarily be true. What may also be happening to the market is that the major oil importing nations are building up inventories of oil, and therefor the demand may seem unusually high.

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