Daily Revolt

January 02, 2008

Oil Tops $96 on Supply Worries

This problem is not going away:
Oil prices rose Wednesday amid expectations a midweek report will show U.S. crude stockpiles fell last week to post the seventh straight decline in inventories for the world's largest energy consumer.

The report is expected to show U.S. crude stocks fell 1.8 million barrels, according to the average forecasts of analysts polled by Dow Jones Newswires.

Light, sweet crude for February delivery gained 43 cents to $96.41 a barrel in Asian electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

Oil prices fell 2 cents to settle at $95.98 a barrel Monday - the last trading day of 2007 - ending the year 57 percent higher than where they began.

Crude futures surged in 2007 as demand from booming economies in Asia increased. More volatility is expected in the crude futures market this year, analysts said, adding it would be of little or no surprise if oil prices surpassed $100 a barrel.

The mess in the Middle East is a large factor in skyrocketing oil prices:
"Fundamentally, I think there may be downward pressure on price, but if there's any supply outage or major turmoil or major problems in producing areas you could easily see prices spike over $100 a barrel," said Jeff Brown, managing director and chief economist at FACTS Global Energy in Singapore.

Other factors that have influenced energy prices recently are the West's standoff with Iran over its nuclear program, attacks by Nigerian rebels on that oil-rich nation's crude infrastructure and Turkish attacks on Kurdish positions in northern Iraq that have sparked concerns of retaliation attacks an oil pipeline in the area.

The assassination of Pakistani opposition leader Benazir Bhutto last week has also exacerbated worries about global instability.

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