Oil prices continued to move higher, moving toward $82 a barrel amid signs the global economy may be improving. Further strengthening the global economic picture, China recently announced plans to extend a stimulus package in hopes of helping the economy increase 8 percent this year. Oil has soared 18 percent since February 5, as investors become more convinced a growing global economy will boost crude demand.
In addition, the Labor Department’s February jobs report, released late last week, buoyed investors by showing that the U.S. economy lost a less-than-expected 36,000 jobs last month and the unemployment rate remained unchanged at 9.7 percent. On the news, the Dow Jones industrial average increased 1.2 percent on Friday, March 6.
Some analysts, however, are hesitant to state that the current increase in oil prices is necessarily a rise in real oil consumption but more influenced by technical factors such as investors’ positions in the market.
Edward Meir of MF Global in New York stated, “Commodity markets often go through periods of ‘disconnect’ between fundamentals and the underlying technicals, and the energy markets… are going through one of those phases right now.” Mr. Meir continued, “We very well could retest the 2010 highs of $83.95. However, our belief is that should we get there, a rather substantial correction will set in, sending prices back into the mid-to high $70 range.”
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