Crude Oil Futures Down, Mideast Suppliers Pledge Provisions
Monday, February 28th, 2011
Crude futures have decreased on the news that Saudi Arabia has increased its crude production to offset the supply gap created by Libyan unrest in the Middle East. Saudi Arabia has now increased production by 500,000 to 600,000 barrels per day to 9 million. A Kuwait official from Petroleum Corp. stated that the member of the Organization of Petroleum Exporting Countries (OPEC) could also increase its output if need be.
The news from oil officials in the Middle East is having a pacifying effect on the oil markets, despite the fact that unrest across the Middle East continues to spread. Oman, bordered by the United Arab Emirates on the north, Saudi Arabia on the west, and Yemen to its southwest, is the latest country to experience the turbulence of protest and threats of civil war. Demonstrators have taken to the streets with demands of wide ranging political reforms and jobs. The protests have thus far resulted in the death of at least two people.
An oil analyst from PFG Best in Chicago, stated that while the Libyan conflict is “boiling” the rest of the Middle East is “simmering,” and there is little indication whether the conflicts will intensify or mollify.
As a result, oil prices remain incredibly volatile rising roughly 14 percent last week. Futures rose above $100 per barrel last week and have been as high as $99.96 per barrel this week before declining. Investors are now focusing on whether the Libyan supply decreases will precipitate an international shortage, and are equally weary of whether other Middle East countries will fall victim to the same disturbances.
For now, the crude oil supply in the global economy remains steady, predominantly in the United States; however, prolonged cuts to the flow of oil from Libya and spreading unrest in the Middle East could still disrupt supply.
Article by Andrew Timm
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: crude oil , libya , oil prices , oman , protests
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