Oil Prices Skyrocket Due to Speculators

The price of oil poked through that mythical $ 100.00 dollar ceiling yesterday (February, 19, 2008) reaching a price of $ 100.01 at the close of trading on the New York Mercantile Exchange. As of mid-day today, oil prices were up another 12 cents, to $100.13 a barrel. Market watcher Charles Langley of the San Diego Utility Consumers' Action Network was quoted in the todays' San Diego Union-Tribune as saying "Yikes!" Langley then went on to state that he thought this was the super spike that analysts have been predicting for years.

What is thought to be a major driving force behind the spike is the possible OPEC vote next month to cut crude oil production. OPEC is projecting a cut in production of 1.8 million barrels a day. This is due to a forecast of a lessening demand in the United States because of the approach the end of the heating oil season. Also driving this market is the falling value of the dollar. Foreign investors find crude oil futures attractive when the dollar falls. Today's inflation numbers to be released by the Labor Department, if as predicted can further drive oil prices up.

Gas prices at the pump rose 2.1 cents today for a national average of $ 3.053 a gallon further fueling speculation of more economic woes ahead due to an increase in consumer prices. The rise in gas prices is expected to hit the economy hard in all sectors especially agriculture and transportation.

Any lists see reports such as the rough weather that has recently shut Mexican ports, violence in Nigeria, the threats of Venezuelan President Hugo Chavez and the refinery fire in Texas as non-factors. Phi Flynn, an analyst at Alaron Trading Corp of Chicago was quoted by NPR as saying "I would imagine that speculators are the biggest drivers today." With the release today of the Consumer Price Index, the price for a barrel of crude may jump even higher.

Sources:

Various Reports: Oil Prices Jump To 100 Dollars A Barrel National Public Radio; http://www.npr.org/templates/story/story.php?storyId=17784031