Oil Prices Soar To New Record Highs

By Stewart Douglas

Oil prices have soared to new highs off the back of the US interest rate cuts, after market trading significantly improved as a result of the increasing stability afforded by the cheaper cost of borrowing.

The price of crude oil rose to $82 a barrel, a new record high as markets saw the impact of significantly lower US interest rates.  The price of oil has continued to rise strongly over the last few weeks amidst improving global market conditions.

With US stockpiles reaching an all time low, and demand from China and India continue to grow strongly, analysts are fearing that the market could be in for a supply shortage over the coming months.

OPEC, the oil cartel responsible for output from the world’s largest crude oil exporting nations, has decided to raise supply over the course of this year in order to help redress the balance, although many analysts are forecasting this as too little, too late.

With OPEC poised to up supply by an extra 500,000 units as of November, worldwide demand is also expected to rise significantly over the period, particularly towards the winter months in Europe and the US.

Analyst forecasts suggest the price of oil could rise as high as $85 a barrel over the course of this period before the supply situation is altered, leading to price inflation throughout industry sectors.

A vital component for fuel, energy and manufacturing processes, higher oil prices can have a profound impact on inflation on a national and global level, which analysts are fearing could be felt towards the end of this year.

This week sees the US report on its oil stockpiles for this month, which will undoubtedly see price swings either way, depending on the extent of the loss, which is predicted could be as significant as three to five million barrels.