OIL prices could hit $100 a barrel within months, oil analysts warned yesterday, unless Opec (Organisation of the Petroleum Exporting Countries) starts to up its oil output in the immediate future.
Some analysts suggest the spike in price will not hit until sometime next year, but others stress that pressure on demand is bringing the day of the $100pb dangerously close.
Speculators are bracing oil to go above $100pb and have up to $5bn sunk into futures at $100pb going forward.
They gain only if oil goes above that level which is a very strong indicator of how some key market watchers are thinking.
Meanwhile, oil prices dipped yesterday when the Opec cartel said it might increase production if high energy prices threatened global growth.
Opec president Mohammed Al Hamli said the organisation was “concerned” about higher prices, although it was not aware that dearer oil was damaging international growth at this point.
In a highly volatile market, news that Chevron had restarted its 270,000-bpd refinery in El Segundo, California, closed since early June, also helped market sentiment about the direction of the price for the black gold.
Chevron’s refinery restart and the Opec’s expressed concerns about the threat from higher oil prices helped ease sentiment on the oil front at the start of a new week, analysts said.
Sceptics warn however, with rising global demand the fragility of global oil supplies will see the price of oil go above $100pb within the next 12 months.
But by 10am yesterday, London’s benchmark Brent crude contracts for September delivery fell 52 cents to $77.57 per barrel as markets took their cue from the Opec statement.
Analyst at the New York Office of Man Financial John Kilduff said: “We’re only a headline of significance away from $100 oil.
“The unrelenting pressure of increased demand has left the market a coiled spring.”
New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Mr Kilduff said in a recent interview.
Opec’s comments yesterday have eased tensions somewhat in the market.
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