Britain could face a winter of rocketing energy costs due to the recent sharp
rises in the price of US crude oil on global markets.
A combination of factors have recently pushed up the price of oil to over
$80 a barrel in the US - an all-time high. This coupled with a lower than
expected increase in production announced by Opec has lead experts to believe
that the price increase will not only be felt on the other side of the Atlantic.
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US
oil stocks have declined as the price of raw crude has risen in recent
months. |
Analysts are giving many reasons for the increase in price, namely political
and military concerns in major oil producing countries such as Iran and Nigeria
strengthening the high oil price all year. This has now been joined by concerns
over Mexico (the world’s fifth-largest producer) where left wing militias have
been blowing up pipelines.
Furthermore, the US government said its oil stocks had declined by 7.01m
barrels – their lowest level for 8 months. Analysts had predicted a drop of 2.4m
barrels.
In addition, Opec disappointed this week by broadcasting that it is to
increase production by just 500,000 barrels per day from November. Analysts had
predicted that Opec would add 1 million barrels to its 30 million barrel daily
output.
However, the US economy may provide some relief in the short-term, the
housing crisis could result in slower consumer spending.
It is forecasted by the International Energy Agency that world oil demand
will increase steadily in the final quarter of 2007 and in 2008.
Sources:
http://www.investmentmarkets.co.uk/
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