Strong global demand and tight supply will buoy prices for the foreseeable future, analysts say
August 3, 2007, 12:01AM EST
By Moira Herbst
Oil prices have now been on a bull run for four years. This year alone, they are up nearly 30%—and much of that rise has come in the past few weeks. The U.S. benchmark West Texas Intermediate crude hit an all-time high of $78.77 in intraday trading earlier this week, and closed at $76.86 a barrel on the New York Mercantile Exchange (NMX) on Aug. 2.
Still, it looks like oil prices could be headed even higher. Surging demand coupled with concerns about tight supplies are sending crude prices up, and there’s no relief in sight on either side. In addition, speculators are now betting on further price spikes. “It looks like [oil] is getting ready to do a new leg of height,” says Peter Beutel, president of the energy risk management firm Cameron Hanover. “There is market momentum, and the magic number now is $81. If we hit that, most people believe it’ll head to $91 or higher.” Beutel adds that some technical charts predict prices could hit $110 or $118 by the end of the year. He adds however that such a spike would take a “smoking gun” like Iran blockading the Strait of Hormuz, the key strategic gateway to the Middle East’s oil supply. read more
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