The echoes of hurricane Dean have not passed away when hurricane Felix is endangering refineries in the Mexican Bay. The price of one barrel of Brent oil on the London Mercantile Exchange jumped over 74 USD per barrel and is slowly moving towards its historic all-time high from July of 2006.
According to meteorologists, the hurricane should not hit the platforms, but for many investors its formation is an enough reason to push prices of oil up.
Important to investors is the increasing confidence due to a better economic outlook for the American economy. The reason for such optimism comes from last week’s declarations by the United Stated President, George W. Bush, and the Chairman of the Federal Reserve System, Ben Bernanke, that they will take any steps to avoid an eventual crisis on the sub prime mortgages market.
It looks like, against the historic price movements, also September can bring us high price levels of oil. Even possible are attacks for highs at 78 USD pre barrel. On Thursday, prices declined after reaching almost 76 USD. Prices fell even though a report showed that crude oil inventories in the US declined by 3.9 million barrels, the lowest level in two years. Investors expecting further increases were disappointed when the US Department of Energy reported that refineries increased operating capacity to 92.1% from a seven-week low of 90.3 percent a week earlier. After the publication, oil dropped to 74 USD per barrel.
Prices of oil are also influenced by decision of the OPEC organization. Despite high prices, the countries registered with OPEC do not see any danger and they do not plan increasing output. Some analysts expect though, that on their next meeting on September 11th, the OPEC organization might decide to increase output, which could cause oil prices to fall. Also, the situation in the Middle-East needs to be tracked since Israel and Syria might be entering into a military conflict.
Adam Narczewski
X-Trade Brokers Dom Maklerski S.A.
adam.narczewski@xtb.pl