Will it go up or come down? At US$100+ a barrel for WTI and 120+ for Brent, Crude Oil has stayed higher at these level much longer than we expected. The only question is if this stability is here to stay or are we going to see another shock in the summer with the arrival of the driving season in the US, this May.
Here are a few hints from recent media coverage about the direction of oil prices in the coming months.
Noted by Moming Zhou of Bloomberg, the first update was Fed’s reluctance to add another stimulus to the economy. Combined with the upcoming refinery turnaround season in China, and the jump in inventory, the news was enough to push oil lower.
The second update, covered by Robert Rapier on FinancialSense.com is important not because it sets the record straight on shale formations and the true picture of US reserves. Many politicians in US have been referring to the Green River Formation in Colorado Utah as a field with reserves larger than those of Saudi Arabia. Robert clarifies the position under the ground.
Gregor Macdonald also at FinancialSense.com discusses how supply is the main factor rather than demand and currency. Supply has been slow to grow causing the prices to rise. Building up on his work on Peak Oil, Gregor predicts increased volatility in oil prices in the New price of oil