According to Yahoo!News:
SINGAPORE – Oil prices hovered above $58 a barrel Tuesday in Asia on growing investor optimism that the worst U.S. recession since World War II may have bottomed.
Benchmark crude for June delivery was down 23 cents to $58.27 a barrel midday in Singapore, in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 13 cents to settle at $58.50.
Oil prices have jumped from below $35 a barrel in February amid signs the pace of economic deterioration has slowed, setting the scene for an eventual recovery.
“The feeling is we’ve seen the worst of it, and the only way now is up,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. “Some of this is also a trading momentum play.”
It’s kind of weird seeing oil prices tied to employment figures, first quarter earning figures and general economy outlook instead of pure demand and supply. The general feel I get from articles such as above is that they are seeking REASONS why oil price had increased the past 2 weeks and identify the culprit.
They had constantly mentioning that there are NO increase in crude demand & there are no pressure on supply side and that is true if you are talking about NOW but if you are talking about future crude demand & supply…it will be another story.
The delicate balance now is for the world to accept the fact that we cannot afford to use oil wastefully anymore even when the economy returns back to “better days”, we will face hyperinflation easily by the up swing of oil prices or down swing of US dollars.
With H1N1 infection still continue to spread across the globe regardless if it’s lethal or not…it may eventually slice off few hundred thousands weak and old people with underlying medical conditions such as a bad lung, heart or other related diseases.
Demand might balance it self with some miracle and normalize the price of oil for a period of time but with more people now investing & speculating on crude oil…it will go ANYWHERE from a super spike one day and a major correction the next and all these happens regardless of actual physical demand.
I am happy that the signs of recession may be easing off slightly and the only way to stay alive is to keep that positive thinking & prepare for contingencies.
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