Oil Prices, Supply And Demand | featured news

Oil consumption rose by its fastest rate since 2004 last year, according to the latest statistics from BP. The news came as members of the Opec oil cartel failed to agree on increasing oil production as a way of lowering prices. Analysts had expected the Vienna meeting to raise output. As a result, oil prices jumped again on fears of limited supply. The value of a barrel of Brent crude rose back above $118 a barrel.

Rex Tillerson, the boss of ExxonMobil admitted last week that the price of oil–based purely on supply and demand- should be in the $60 to $70 a barrel range. The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds.

Oil prices fell 3.2% Monday, to below $70 a barrel, as further signs of weak fuel demand raised expectations that prices may have raced ahead of the nascent economic recovery.

Crude oil rose to a seven-month high and gasoline surged after Goldman Sachs Group Inc. said prices may reach $85 by the end of the year as demand recovers and supplies shrink.