Storage one culprit of higher oil prices
Oil minister Ali Naimi says that global demand for crude is picking up, but analysts say we're not seeing much higher consumption, just higher storage. Stephen Beard reports prices could drop if world oil storage runs out.
Stacks of empty barrels used to hold fuel in Baghdad (Ali Al-Saadi/AFP/Getty Images)
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Bill Radke: the price of oil keeps rising -- it's above $63 a barrel this morning -- that's a six-month high -- and Saudi Arabia's oil minister says it'll keep on climbing. The minister made his comments today ahead of tomorrow's OPEC meeting in Vienna. From the European Desk Stephen Beard reports.
Stephen Beard: The oil minister, Ali Naimi, says that global demand for crude is picking up. He claims that consumption in China is rising strongly. And that's already been reflected in the recent price rise. Naimi says we could easily see oil hit $75 to $80 a barrel later this year.
But many analysts are rather less bullish about crude. Simon Wardell of Global Insight says we're not seeing much higher consumption, just higher storage. Speculators are buying oil and storing it in the hope of higher prices.
Simon Wardell: We do continue to see inventories rising. In fact, there's a lot of speculation that we might actually run out of storage some time in the next four to six weeks because we still have a surplus in the market.
Wardell says if world oil storage capacity does run out within the next few weeks, the price of crude could drop like a stone.
In London, this is Stephen Beard for Marketplace.
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From Columbus, OH, 06/02/2009
It just really supprises me that they are allowed to do that. People actualy taking delivery of oil and storing it with no intention of using it. Isn't that considered hording. I mean if Goldman or Morgan would do that (I am sure they are) wouldn't that raise red flags since they are the biggest advocate for adding bullish data to the market. Grab it, store it, say there isn't enough of it and then sell it at a high price.
From FL, 05/27/2009
I realize there is alway someone who will 'play the system/market' to their advantage. Are the individuals who buy and store the crude oil actually taking owernship or is this bellowing over barrels. Remember it was about a year ago that speculation on future delivery drove the price per barrel to the moon.
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