Oil prices hit $100 a barrel yesterday for the first time, a watershed mark that appeared inevitable after several months of volatility and seemingly endless price increases.
According to a report by the Associated Press, crude oil for January delivery increased $4.02 to $100 a barrel Wednesday on the New York Mercantile Exchange before quickly falling back to $99.48.
The report suggested that supplies would continue to fall behind demand for oil and petroleum due to surging economies in China and India and strife in heavy oil-producing countries such as Nigeria and Iran, as well as the closing of several Mexican ports due to inclement weather.
However, while $100 is a milestone, according to Denton Cinquegrana, markets editor for the Oil Price Information Service (OPIS), the price was a one-time sale and it hasn’t hit that mark since, although nobody would be surprised if it did again in the near future.
Cinquegrana told Fleet Owner that the purchase was one customer for one lot, before the price quickly fell below the century mark again. However, that doesn’t mean it won’t go over $100 again soon, and for a longer period of time. “I think prices still point upwards, based on how the market is behaving,” he said, adding that he wouldn’t be surprised if prices got there again by the end of today.
“We’ve been in the $90s for the last couple of months, with diesel close to record prices,” he said. Diesel hit a record price of slightly below $3.50 right after Thanksgiving. According to the latest figures compiled by Martin Labbe Associates (MLA), diesel averaged $3.35 for the week of December 31st. This is an increase of $.04 from the previous week, but still nine cents below the week of November 26th.
Predictions for the price of oil in 2008 remain high. “Even with the most conservative estimates, all forecasts for 2008 are for well over $80 a barrel,” Cinquegrana said, adding that it is hard to tell how long it will stay in the $90s—it could be a few weeks, a few months, or even longer.
The historic price of oil comes on the heels of a recent report that suggests oil-producing countries may not be able to meet demand sooner than anticipated.
According to the Associated Press, the December issue of the OPEC Review, published by the Organization of Petroleum Exporting Countries (OPEC) said that its countries may not be able to produce enough oil at an earlier date than previously speculated. The group may be hard-pressed to meet supply needs and may not be able to meet demand at some point between 2024 and 2048, with several countries unable to produce their share even sooner, the report said.