The International Energy Agency (IEA) has warned that rising oil prices are looming, and analysts are cautioning that this could hinder any type of recovery in the near future. Spence Swartz for The Wall Street Journal reports that U.S. oil prices have eased off the $87 a barrel level hit last week, but are still above the $70-to-$80 range that has been the norm for months. OPEC posted its first “significant decline” in production last month, which means prices may not stay where they are for long. [Where Oil Prices and ETFs Are Headed.]
Oil prices haven’t been driven by demand, but primarily by economic optimism. Jobs were created last month, retail numbers are positive and the Federal Reserve likes what the economy has done so far. That said, the IEA feels that global oil demand could actually spike this year, by 30,000 barrels a day. [What Oil and Gas ETFs Will Do Next.]
These opposing forces are pushing and pulling oil prices, but whether lower or higher prices ultimately emerge victorious remains to be seen. The IEA suspects that there may be a break for American consumers in there.
U.S. drivers are looking at about $3 per gallon of gasoline now and this summer. It may compel them to drive less, and the IEA suggests that if that happens, stockpiles of oil and gasoline may strengthen and could cause downward pressure on prices. [How to Hedge Rising Gas Prices.]
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