End of an era of cheap oil


Part 1.

Global demand is pushing up oil futures market. The increase in consumption of petroleum products in the U.S. and China (in the potential and India) and the limited resources of raw materials put an end to the era of cheap oil. Moreover, a high level of geopolitical risk and speculation in the market of some large hedge funds only add confidence bulls. Fundamental factors indicate that the era of cheap oil - at $ 16-22 a barrel - sank into oblivion.

The U.S. economy is "addicted" to oil "needle"

This summer, we have witnessed the rapid rise in oil prices. Oil futures rally was the main topic of discussion for traders, economists and politicians. In August, the price of a barrel of crude oil has repeatedly established new absolute highs. In particular, the threat of termination of production of oil at the enterprises of the Russian oil company "Yukos" repeatedly threw a price of IPE International Petroleum Exchange in London.

As can be seen, August 18, cost of a barrel of crude oil for October delivery on the IPE rose $ 0.79, or 2.1%, to $ 41.40. However, this record was broken the next day, when a new round of doubts regarding the supply of oil to the world market has stimulated the "crazy" rally.

For the first time in 21 years of trade oil futures on the London Stock Exchange IPE their quotes more than $ 45 per barrel, which was a new record value for the North Sea.

Setting new records, oil prices have gradually adjusted downward. As a result, the cost of crude oil is now about 40% above the level at which it was recorded a year ago.

Among the main reasons for holding the price of oil on the maximum elevation, - preservation of geopolitical tensions in the Middle East, including attacks on oil terminals in Iraq, strikes oil in Norway and Nigeria, the political problems in Venezuela, the uncertainty of the situation around the company "Yukos", threat reduction in oil production in the Gulf of Mexico because of a series of hurricanes and the prospects for raising the level of world oil consumption.

Prices are rising along with a proposal!

In late summer, the International Energy Agency (IEA), which represents the interests of industrialized countries-members of the OECD, revised data on global oil demand in 2002-03., Taking into account new information about oil consumption in countries outside the OECD. It turned out that the demand for oil in the last two years has grown more rapidly than previously thought.

In accordance with this conclusion IEA raised its forecast for oil demand in 2004 by 750 thousand barrels per day to 82.2 million barrels. Raised its forecast for oil demand due to increase in the benchmark, the agency left unchanged the forecast for growth in oil demand in general. Forecast to IEA, in 2004, global oil demand will rise by 2.5 million barrels a day, and in 2005 - by 1.8 million barrels. In July, the world's supply of oil increased by 550 thousand barrels per day to 83.5 million barrels.