Oil prices rise behind belief that recovery is near

16-Jun-09
Crude oil prices have risen to new highs for the year to US$72.6, as compared to levels below US$35 in March. Interestingly, though oil prices have been rising for a month now, many analysts believe that the current oil valuation is not based on economic reality, but due to market players who are trading on perception that an economic recovery is underway. A fairly consistent stock market since March, reports of dropping crude-oil inventory and rising fuel consumption are fueling the sentiments. As the dollar weakens, it continue sto strengthen oil prices as a weaker dollar causes investors to hoard commodities, considered a reliable bet. Last week’s report by the US Energy Information Administration has reported a fall in US crude oil inventories by 4.4 mln barrels last week, far more than market expectations. A June report by the International Energy Agency has estimated global oil demand to be 83.3 million bpd this year- rising from 83.18 million barrels in IEA's May report.
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