Oil prices remain low
El Nino conditions,
and the accompanying warm weather, have reduced demand for oil
and kept the prices low for the winter. A month of cold weather
in the USA put an end to dropping prices, which might rally if
weather continues cold, but the imminent onset of spring will
mitigate this.
NOAA
continues to predict warm weather
NOAA (National
Oceanic & Atmospheric Administration - US Dep't of Commerce)
continues to predict warmer-than-usual weather for the entire USA, especially the western half. Although it is possible that the eastern USA will continue to be chilly, the warm weather in the west will improve our supply of oil and keep prices low. Outlook good for oil!
Please click
here to read the report.
Oil prices do
not fluctuate immediately on the basis of news. They are also
not tied to gasoline or natural gas prices, all of which have
a separate supply line and market demands. Oil prices change mostly
based on supply and demand, which are affected by many short and
long-term issues (see next story!). However, when demand is down
during the height of the heating season it will tend to cause
lower prices for the remainder of the season than would have occurred
if demand for oil was high.
Highlights from OPEC's Monthly Report
- World economy
is expected to grow about 4% this year.
- Recent
low oil prices were caused by exceptionally warm weather.
- Economic
growth in Asia continues at a breakneck pace, but has not yet
negatively impacted the supply of oil to America..
- To read the report yourself,
please visit
their page.
Ranco comment:
OPEC is responding with confidence to
current low prices of oil and not taking any current emergency
measures, so barring disasters, the oil prices may remain low
until the season changes. Improvements in refinery capacity, especially
in the US, are also helping reduce oil prices, plus increasing
consumer concern for efficiency in the form of hybrid cars, greater
heating efficiency, and so forth. Whenever the market is volatile
like this, however, there will continue to be rising and falling
of prices through the heating season based on events and local
conditions.
