Crude Surges
Posted on: Dec 12th, 2008 | Doug Casey | Filed under Financial News
In the energy market Thursday, oil prices shot higher, with crude for January delivery closing at $47.98/barrel, up $4.46. January reformulated gasoline rose 11 cents, to $1.08/gallon.
It’s all about OPEC. “Currently, there appears to be no sign of the deteriorating demand outlook bottoming out, so one of the main factors supporting prices at the moment is market expectations of a large OPEC cut next week,” wrote Nimit Khamar, analyst at Sucden Research.
A major production cut is almost universally expected next week. However, “in our opinion, if OPEC fails to meet these expectations, then oil prices could test recent lows once again,” Khamar said.
Meanwhile, there are dueling numbers on the supply side. Yesterday, the International Energy Agency said while it expects global consumption to fall by 200,000 barrels a day this year, it should rise by a half-million barrels a day in 2009, largely based on an assumption that the global economy will gradually recover in the second half of next year.
In contrast, the Energy Information Administration predicted three days ago that global consumption would decline during both years, by 50,000 barrels a day in 2008 and by 450,000 barrels a day in 2009. If so, it would mark the first time in three decades that world consumption declined in two consecutive years.
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