The Wall Street Journal posted oil production numbers for March that disclose the shortfall from the Libyan conflict. When the news hit the tape, Brent Crude exploded to the upside trading at $120.17 per barrel, up $1.47 (12:45 EDT.)Here are the stats:
- OPEC production fell 411,000 barrels per day to 29,343 million bpd.
- Libya's production fell 343,000 barrels per day, from 1,396,000 bpd.
- Nigeria fell 107,000 barrels per day due to Royal Dutch (RDS) Oil maintenance.
Here's the real kicker. OPEC's seaborne exports are expected to fall by 530,000 barrels per day in the next four weeks.
The $120 per barrel is getting dangerously close to the record $147 per barrel. If you remember that kicked off a spike in gasoline prices to $4.00 per gallon. It's almost a foregone conclusion that gas will go back there soon. Who knows, before this is over gas may go to $5.00 per gallon or higher.
Already household budgets are being stretched with 35% going to food and energy. Where the tipping point is no one knows, but we may be faced with another case of 'demand destruction' where the price gets so high that consumers cut back on their driving. Than could have implications for the economy as whole.
Reader Comments (Page 1 of 1)
4-04-2011 @ 7:15PM
william lindblad said...
I think it is close to the breaking point already. One should take into consideration that the last spike came in a robust economy. Irony is that we have a "glut" in the U.S. and the price is speculator driven. Another view for capitalism could be sell your independence to fund your downfall. I know the trading is legal, but when it is destroying your economy? While Congress is worrying about the budget/defecit, this is a larger threat as if they do not fix this - the former will just get bigger.
(hint - change the laws)
4-04-2011 @ 8:33PM
DROF2TH said...
WHO SAID "UNDER MY PLAN, ENERGY RATES WOULD NECESSARILY SKYROCKET"? YES, YOUR MORON OBAMA! AND YOU IDIOTS STILL VOTED FOR HIM? I HOPE YOU LIKE YOUR CHANGE, AFTER FILLING YOUR GAS TANK!!!
4-10-2011 @ 2:52AM
Bob Rubin said...
The price of oil has gone up about 13% since early March. This is welcome news to those who want to drive the US toward alternative energy sources. In fact, advocacy groups have been calling for years for higher gas prices. The shoving match between the US economy and these ideological zealots comes down to US government policy, and that is up for grabs during these partisan days. I agree with Ms. Madon that rising prices will soon shrink demand, until a new equilibrium is reached between supply and demand. What that price will be is an unknown.
Just as an investor, I think that neutral options strategies are the best way to go for oil. Straddles or strangles both assume that there will be large price moves, without saying whether these will be up or down. Investors can profit either way. More about straddles at
4-10-2011 @ 2:56AM
Bob Rubin said...
The price of oil has gone up about 13% since early March. This is welcome news to those who want to drive the US toward alternative energy sources. In fact, advocacy groups have been calling for years for higher gas prices. The shoving match between the US economy and these ideological zealots comes down to US government policy, and that is up for grabs during these partisan days. I agree with Ms. Madon that rising prices will soon shrink demand, until a new equilibrium is reached between supply and demand. What that price will be is an unknown.
Just as an investor, I think that neutral options strategies are the best way to go for oil. Straddles or strangles both assume that there will be large price moves, without saying whether these will be up or down. Investors can profit either way. More about straddles at http://safemoneyproducts.com/options-investment/.