Reply
Fri 4 Jan, 2008 01:25 am
Crude oil has breached the psychological barrier of $100 during intraday trade on NYMEX.I strongly feel that geopolitical factors and supply concerns are responsible for this and that the prices would remain in $90 to $110 range during 2008. Post your views and comments
What is going to stop the price of oil from continuing to increase?
There are two different factors going on. The first is the supply/demand situation. World demand for crude oil is increasing 2-3% per year, partially from India and China. Unfortunately, we will be lucky to maintain our current global production (yes, a few new big projects will be coming on-line such as Manifa and Sakhalin, but these probably won't be enough to balance the loss of production from mature fields).
The second factor is the U.S. Dollar falling. This won't affect consumers in Europe and east Asia, but U.S. consumers will feel the pain.
I do not see anything on the horizon to stop the price (at least in USD terms) from continuing to increase.