Slowly but surely, it creeps ever upwards as crude oil passed the $90 a barrel milestone.
The magic $100 a barrel is now only $10 dollars away as crude oil prices show no sign of slowing down. Persistent worries about tight supplies ahead of the winter peak season and fresh geopolitical tensions have helped push the price higher.
Edward Morse, chief energy economist at Lehman Brothers in New York, said that speculators betting on further US dollar weakness ahead of the G7 meeting this weekend and the US Federal Reserve on October 31 were propping up the oil price.
A lower dollar suggests that producing countries, such as Saudi Arabia, may try to keep the oil price higher to compensate for more expensive imports priced in other currencies. The strength of the euro, sterling and other currencies also mean that some countries, particularly in Europe, are partially insulated from the oil price rally.
Kevin Norrish of Barclays Capital said that the issue no longer seemed to be whether oil will reach $100 a barrel, but when. ”Until there is a clear prospect of the [supply-demand] gap being filled, then the course is set for the market to take out $90, $100 and $110 in fairly quick succession,” Mr Norrish said.