Crude Oil Declines on Demand Concerns
Posted on 27. Jan, 2009 by admin in Crude Oil
The price of a barrel of Crude Oil fell around half a Dollar, or 1.5%, yesterday as the Organization of Petroleum Exporting Countries (OPEC) fears that their production cut may not be adequate enough to support prices. The International Energy Agency (IEA) backed these claims, stating that demand for Oil will decline for a 2nd year in a row as the global recession is set to prolong. Analysts say that the expected 5% cut in OPEC output this month won’t be enough to support the prices. This comes about as supplies of Crude Oil in the United States reached their highest level since August 2007.
In the meantime, one of the only ways to uphold Crude’s price, and push it up to a more desirable price-level, is by OPEC agreeing to cut production further. They are expected to meet again in March as the drop in revenues has pushed many Middle Eastern countries into the red. Today, Crude Oil may reverse some of yesterday’s gains if Europe and the U.S. post positive economic data releases. What may also put pressure on Crude’s price later today is if Barack Obama and Treasury Secretary Timothy Geithner increase their tough rhetoric on taking the U.S. and the world out of this recession.
