Crude Oil

The Organisation of Petroleum Exporting Countries (OPEC) increased crude oil production by 300,000 barrels per day to 28.39 million barrels per day in May 2009. According to John Kingston, global director at Platts, a leading provider of energy information globally, “with the recent increases in crude oil prices, the drumbeat that we’re on our way back to $100-per-barrel-oil has been growing louder”. However, the surge in output shows that OPEC has a lot of productive capacity that it can bring on the market relatively quickly, and that should certainly prove a hurdle to any move back to three-digit oil prices, feels Kingston. Crude prices have been rising steadily since mid-February and have touched $72 a barrel. The International Energy Agency (IEA) has increased its estimate for oil demand by 120,000 barrels per day to 83.3 million barrels per day in May 2009. Another factor that has been helping crude prices is the increase in China’s industrial output. The Chinese industrial output grew 8.9% in May 2009 compared with the same period last year. Being one of the largest consumers of crude, a higher demand from that countru is likely to keep prices of the commodity on the higher side.

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