Oil Prices Fall Back
By Stewart Douglas
October 3, 2007
The price of oil has finally slipped back on international markets below the $80 mark, with investors keenly anticipating figures from the US crude oil inventory due tomorrow.
The price of crude oil has fallen back over the last few days with investors content to reap the rewards of their investment purchases through selling stock and holding off on any immediate purchases as the November 1st supply increase approaches.
This has seen the price of crude oil, measured per barrel, fall from its $83.90 high around one week ago to under $80 at $79.46 through trading today in light of the pending US stock inventory announcement.
The fall in price has been unexpected given the extent of the weakness of the dollar in recent weeks, which it was thought would apply inevitable upwards price pressure to crude value. However, by virtue of its fall nevertheless, this highlights the extent of sell offs of oil inventory by investment buyers over the period.
Major oil cartel OPEC announced earlier in the summer that it was to increase production by half a million barrels a day as of the first of November this year in order to curb the rising price of crude oil.
Oil had been sharply rising as a result of dwindling supply and rapidly expanding demand in markets like China and India. Additionally with stock markets in turmoil, oil investment was even more attractive for investors as a relative ’safe haven’ after the sub-prime unrest.
On top of that outages as a result of severe weather in the Gulf of Mexico and power problems in US refineries several months ago also added to the growing price pressures on crude oil, which it now appears are starting to subside with the US figures predicted tomorrow.
It remains to be seen to what extent US stock have fallen tomorrow, with analysts predicting that there could be yet more bad news for the price of crude oil in the immediate term on the way.