The price per barrel of oil reached another historic high today. Oil futures pulled back a little after reaching a record high level of $135.00 per barrel. New York light sweet crude hit $135.09 per barrel and Brent North Sea oil reached $135.14 a barrel.
“It seems there is no stopping to soaring oil prices,” said Andrey Kryuchenkov at the Sucden brokerage in London. “Investors doubt that the market will be able to meet ever growing demand in the long run, with booming emerging market economies underpinning robust demand for energy,” he added.
Since the beginning of 2008, crude futures are up an amazing 33 percent. Analysts claim that crude oil at the current price is a cheaper energy source, being less expensive today than 1974, at least in terms of purchasing power.
The current rise in price is a reflection of the current fear that there will not be enough oil to sustain emerging market economies, high Asian demand for fuel and a weak US dollar, as well as falling energy inventories. The Wall Street Journal reported that a sweeping review of existing oil fields and investment in oil extraction was leading the IEA to conclude that the aging of existing oil fields and inadequate investment meant that “future crude-oil supplies could be far tighter than previously thought.”
OPEC insists that the current prices are not a reflection of supply and demand, because there is no shortage. From an investment standpoint, oil has recently outperformed equities and bonds. From a consumer’s standpoint, the onset of a busy motorist season and the threat of inflation is pounding on our door.
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