Oil prices at two-year high
Oil prices are pushing higher after reaching the highest mark in two years this week. A barrel of light sweet crude settled at $91.51, up $1.03, on the New York NYMEX Futures board Wednesday (December 23).
Oil pierced the $90 level earlier this week after spending most of the second half of 2010 moving up and down in the low to high $80s.
Americans are paying more at the pump than ever before during the Christmas holiday season thanks to the rising oil prices.
Despite slightly higher than $3 per gallon national average gasoline prices, top energy analysts believe higher oil prices are not going to restrict global economic recovery efforts.
Reuters conducted a poll of 12 oil industry analysts that indicates 2011 is going to bring the highest oil demand in history. These results follow somewhat better than expected increases in oil demand over the course of 2010.
Emerging industrial markets in parts of Asia and other countries are driving global oil demand. Rising prices may put a damper on growth in developing economies, but some analysts believe the result is not going to adversely impact these fast developing countries.
Some analysts are more cautious about projecting oil prices in coming years. Global Insight predicts an average of just $88 per barrel for 2011, but it also sees growth to $95 for 2012 and $100 for 2013.
While rising oil prices is generally accepted as a positive sign for the global economy, out of work Americans are not as excited about the prospects of paying higher prices at the fuel pump.
Unemployment remains just below 10 per cent and recent forecasts suggest that unemployment may remain in the 9 to 10 per cent range for 2011. Some jobs analysts expect unemployment to remain over 8 per cent until at least 2012.
With a break above $90 and the holiday season in full swing, zealous speculators could easily drive prices closer to $100 as 2010 winds down. This may prove a short term move based on expectations for 2011.
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