Gas Prices

Oil Prices Still Too High Says IEA

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Although oil prices have dropped about 14% in the last month, and gasoline and heating oil prices are following, The International Energy Administration said yesterday that oil prices are still too high. Amid growing concerns that the overall run-up in oil prices since last September is affecting recovering world economies, IEA indicated that there is an “urgent need” for additional oil production to prevent further price increases in oil and fuel prices. In overnight trading, crude oil prices rose to over $99 a barrel compared to $68 a year ago. Read More »
Silver Oil Tanks

Should Obama Use Strategic Oil Reserves to Relieve Oil Prices?

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As oil prices continue to surge on news of supply interruptions from Libya as well as increasing demand due to the ongoing economic recovery, the Obama administration is reviewing all options, including using the U.S. Strategic Oil Reserves. Over the weekend, administration officials acknowledged that the Strategic Oil Reserve is “on the table” as an option to add supply to the market, and potentially slowing the increase in oil prices. “It is something that only has been done on very rare occasions,'' said William Daley on "Meet the Press" on NBC, adding, ''It is something we are considering.'' There is increasing concern that if oil prices remain above $105 or $110 a barrel, it could damage the U.S. economic recovery. Meanwhile both Japan and South Korea have said that they have not yet made plans to release any oil form their strategic oil reserves.

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Recent Heating Oil Price Increases Along With Other Fuels Is Due to "Real Demand"

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The International Energy Agency’s chief economist, Fatih Birol, said today that the increase in oil prices over the last 4 months is due to real demand and not speculation or loose monetary policy. That is welcome news to those who fear that increases in heating oil prices, gasoline and diesel fuel prices are the result of price manipulation or increased profit margins at energy retailers or fuel distribution companies, but rather the result of increased demand for crude oil driven by “real demand.” Birol went on to comment that “the hint from the Saudi’s that they will raise output if oil demand continues to strengthen is “a very welcome move.”

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Silver Oil Tanks

Crude Oil Prices and Demand

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According to the International Energy Agency’s monthly report, “the rise in the price of crude oil, to a 2 year high over the $90 level, stems from “exceptional” growth in the 3rd quarter”. In addition, crude oil prices have been “compounded by extremely cold weather in the northern hemisphere”. The IEA now forecasts that growth of oil demand in 2011 will be roughly half of the growth in 2010.

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Incline of Global Demand for Crude Oil While Decline for Global Inventories

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Global demand for crude oil reached an all-time high in the third quarter of 2010 according to the International Energy Administration. Not surprisingly, during the same period global inventories have declined. Morgan Stanley Research published a report on December 10, 2010 titled Commodities, 2011 Outlook: A Commodity Bull Market. In the report, Morgan Stanley points out that “in an increasingly integrated global economy these fundamentals could go far to explain the underlying strength in oil prices”.

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Trans Alaska Pipeline Reopened, Leak Fixed

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The Trans Alaska Pipeline has now reopened following a shutdown to repair a leak, and its positive impact on oil supply to the US has held down oil prices. In spite of the International Energy Agency’s prediction for higher global oil demand in 2011, the increased volume from the largest U.S. oil field began flowing to market and caused some reductions in the wholesale cost of refined products such as gasoline, heating oil and diesel fuel.

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