Oil prices have been falling for six days [see oil price widgets in right margin]. The dire European economic crisis is part of the reason, since economies in trouble buy less oil. In addition, oil production has been raised to bring the price down a bit in a controlled fashion. AFP reports:
New York’s main contract, West Texas Intermediate (WTI) crude for delivery in June, dropped 51 cents to $96.50 a barrel, two days after hitting a near-five month low at $95.34.
Brent North Sea crude for June shed 63 cents to $112.10 a barrel in London midday deals, one day after striking a four-month low at $110.53.
Crude supplies reported by the US government are the highest in 22 years, because some oil producers want the price down a notch to prevent possible price collapse.
Crude was also under pressure from indications that Saudi Arabia, the world’s top oil producer, could increase its output as it fears that if they remain unsustainably high demand — and prices — will fall.
Retail prices in the US are presently $US3.75 per gallon, the equivalent of $US0.99 per litre — about $NZ1.26 per litre, and predicted to fall further over the northern summer.
Peak oil? Not any time soon.
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What was that – a negative feedback mechanism.
Isn’t it wonderful, its not just nature that has negative feedbacks, even our economy has them.
Richard,
The recent IMF prediction is that oil will double in cost by 2020.
Credible?
Well, about as credible as the CIA’s dire oil supply/price predictions following the 1973 Israel-Syria spat to which I had access (the document was classified as “restricted -NFG” but had been made available to selected NZ Ministers.) in the mid 70s. The prognosis was to a significant extent responsible for NZ’s energy “think big” plans. We all know how they ended.
For so long as the speculators are making a $, the price of oil will yo-yo.