Don’t look now, but oil prices are rising

Don’t look now, but oil prices are rising

Crude oil prices, which have rattled petrostates by plunging 60 percent from their summer 2014 highs, are suddenly leaping back up. Prices for benchmark crudes have jumped about 15 percent in the last week, and they continued to do so early Tuesday, Feb. 3, with Brent crude futures closing in on $58 a barrel in London.

It appears that oil prices finally found their floor, after months in which analysts raced to slash oil-price forecasts and worried oil-producing states vied with each other to paint ever-more-dire pictures of plunging crude.

The uptick promises some measure of relief for the countries, from Russia to Venezuela, that have been battered by the collapse in crude prices in recent months; both those two countries suffer soaring inflation and roaring budget deficits. But the nature of the rebound also offers a cautionary word about why it’s happening — and suggests there will be more, not less, market volatility in the months to come.

Oil prices aren’t rebounding because the world has suddenly run short of the stuff, nor have the lower prices spurred any major uptick in demand for oil: There is still more oil sloshing around the market than there are purchasers waiting to snap it up.

Source: Foreign Policy FP

Date: February 2015

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Tags assigned to this article:
economicsfossil fuelsoil

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