Growth oil consumption expected to continue; oil prices decline this week
US Energy Information Administration (EIA) stated (17-Nov-2010) since the start of Oct-2009, the daily closing spot price for West Texas Intermediate (WTI) crude oil has fallen between USD70 and USD85 per barrel 92% of the time. During the past two weeks the closing WTI spot price pushed past USD85 on 04-Nov-2010 and closed above USD87 per barrel on 08-Nov-2010 through 10-Nov-2010. Oil prices have not been this high since Oct-2008, at which time they were falling rapidly from historic highs seen earlier that year. With recent spot prices now near or above the USD85 level for the longest consecutive stretch since early Oct-2008, market participants are naturally interested in whether or not the USD70-85 per barrel price range will remain relevant over the coming months, according to the EIA. The strong growth in recent global oil consumption, and the expectation that it may continue, is one factor that has contributed to recent crude oil price increases. EIA now expects global petroleum consumption to grow 2.0 million barrels per day (the second highest annual growth rate in at least the past decade). Meanwhile, oil prices fell for a fourth day, with crude oil prices declining to a four-week low, as speculation that Chinese fuel demand may slump outweighed signs that US consumption is increasing (Bloomberg, 17-Nov-2010). Futures declined as much as 1.4% after Chinese Premier Wen Jiabao stated the government was drafting measures to counter inflation. Prices also fell on concern Europe’s debt crisis is worsening as ministers considered a rescue package for Irish banks.