Falling US crude stocks, fears about storm damage to Gulf of Mexico oil installations, a half-point cut in key US interest rates and a weak dollar sent oil to a record $US83.90 a barrel this month.
A tropical depression developing in the GoM helped push crude oil futures to record levels above $83 a barrel last week as oil companies evacuated oil platforms and shut down production.
According to reports, 60% of production in the region had been halted last Friday as a safety precaution, but was gradually being restored after the weather system dissipated without damaging key oil and gas infrastructure in the area.
But the easing in prices has been minimal with prices for New York’s West Texas Intermediate benchmark crude remaining above $US80 throughout the week, and WTI closing at $US82.86 yesterday.
Tapis, the Asia-Pacific benchmark crude, continues to trade at a premium to WTI. Tapis remained well above $US83 throughout the week and closed at $US83.81 yesterday.
A Reuters poll this week found that high oil prices are expected to continue into the New Year, with analysts raising their average 2008 oil price forecast for US crude to $67 a barrel.
The forecast surpasses the record average of $66.24, reached in 2006.
According to the poll, analysts believe prices will peak in 2008 with average US crude prices declining to $62.74 the following year and $59.41 in 2010.
The Organisation of the Petroleum Exporting Countries pledged this month to raise oil output by 500,000 barrels per day from November 1, but the move did little to soothe consumer concerns that supplies may run thin this winter.
