US Crude Oil Stockpiles Fall

Oil prices have today risen beyond $77 per barrel after official figures have shown a significant fall in US crude oil reserves beyond analyst’s expectations.

With oil prices nursing around the high $70 mark for some months now, the news of falling stockpiles in the US has driven the price of oil even closer to breaking the $80 boundary. The current price, whilst high, still falls short of the record highs of $78.77 seen in August this year.

Long term supply shortages and power outages at US refineries had been previously held responsible for the high price of oil. With OPEC having been predicted to increase output until now, analysts had thought that prices would tumble.

However, the prospect of OPEC increasing output has now declined, and the significant decreases in US oil reserves have sent oil prices spiralling to reflect the greater supply shortage than had previously been expected.

The high price of oil further compounds many analysts views that the world economy could be in for recession. Playing an instrumental role in the health of the global economy, rising oil prices push up inflation across business and consumer goods and can seriously impact upon economic growth.

And with financial markets already in turmoil and the tightening credit environment, economies could feel the brunt of rising oil prices more severly than was previously the case, leading to significantly less stability in markets across the globe.

OPEC, the cartel of nations responsible for 40% of world oil exports, are expected to meet later next week to discuss supply and demand for world oil as a market regulator, which analysts are hoping will take into account growing demand from Eastern markets and idle production capacity, which would lead to a fall in the price for crude oil.

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