The Prospects for Oil Prices: the Dangers of Wet Barrel Supply Chasing Paper Barrel Demand
Article from: OGEL 3 (2004), in Economic and Commercial Context for Oil, Gas and Energy Law
Introduction
Throughout this year, oil prices have shown considerable strength. This has both surprised and puzzled analysts. Compared to an average Brent price in 2003 of $28.81 per barrel, this year has seen an inexorable rise - $32.03 in the first quarter, £35.37 in the second quarter and over $39 by the end of July. Trying to explain this trend is both complex and controversial. The analysis must begin with the physical market for crude oil - the wet barrel market - which is perceived to be tight. The main characteristic of demand has been unexpected strength throughout 2004. In July, for ...