“The price of oil, which has been inexorably rising for the past two years, finally broke through the $50-a-barrel mark Tuesday, reaching a new milestone as some analysts warned that there was nothing to stop prices from rising even further.
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Fueling these gains is an exceptional alignment of events: record high demand, historically low spare capacity, and a set of potentially destabilizing events in some of the world’s top oil regions, countries ranging from Iraq and Russia to Venezuela and Nigeria, to name but some.
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‘The market is looking for a new equilibrium point, and no one knows where that will be,’ said Jamal Qureshi, an analyst at PFC Energy, a Washington-based oil consultancy.
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‘We still have a way to go. I wouldn’t be surprised to see $60 a barrel.’
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Crude oil for November delivery jumped as high as $50.47 a barrel in early Tuesday morning trading, and although its price retreated somewhat, it remained close to $50, closing at $49.90 on the New York Mercantile Exchange, up 26 cents.
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Oil prices, which are up nearly 55 percent this year, have doubled in two years.
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What pushed prices up this week, for example, was the news about possible clashes between the army and rebels in Nigeria that could threaten that country’s oil production, along with the consequences of the passage last week of Hurricane Ivan over the Gulf of Mexico – a region that provides one-quarter of U.S. domestic oil production.
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At the same time, demand for oil is running at a pace not seen since 1978. The world is expected to consume nearly one billion more barrels of oil this year than it did last year, driven by strong and sustained demand from China and India as well as the United States.”
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