Friday, May 29, 2009

oil floats higher

WaPo | The price of crude oil once again seems to be defying the economic forces of gravity.

There's plenty of evidence to suggest prices should be falling. In industrialized countries, storage tanks are overflowing, with enough supplies to cover 62 days of use, about 10 days more than usual. Economic weakness continues to depress world demand, which is on track to fall for the second consecutive year. And oil-producing countries, while restraining output, are adding to production capacity. New Saudi Arabian wells coming on line this year will exceed the entire production capacity of Texas.

But instead of dropping, the price of crude oil rose to more than $65 a barrel yesterday, the highest in more than six months. And some analysts said it could rise even higher as the summer driving season arrives. Saudi Arabian Oil Minister Ali al-Naimi said this week that a $75-a-barrel price was within reach.