Weak oil supplies & rising prices fail to dampen consumer demand

07 May '08

2 min read

Crude oil prices rose to US $122 a barrel in New York yesterday accrediting Nigerian crisis for the hike.

Violence in Nigeria, cut oil supplies from Africa's biggest oil producer, increasing its prices while there was no drop seen on the demand side.

Experts making observations on the market scenario believe that rising oil prices will have virtually no effect on the robust demand for the commodity in India and China because of the economic growth of the countries and subsidies given to the consumer by the Governments.

Crude oil for June delivery was at $121.74 a barrel, down by 10 cents in Singapore in after hours trading on New York Mercantile Exchange. Oil mounted to $122.73 a barrel and futures advanced $1.87, or 1.6 percent, to settle at $121.84 a barrel which the highest close recorded since trading began in 1983. Surprisingly, prices surged nearly 98 percent from a year earlier.

Brent crude oil for June settlement was at $120.19 a barrel, down 12 cents, on London's ICE Futures Europe exchange. The contract touched $120.99 yesterday, marking a record intraday price.

A shortage in supply is expected to take oil prices to $150-200 a barrel in the next two years time.

Oil consumption in China will rise by 4.7 percent to touch 7.89 million barrels a day while global demand will soar by 1.5 percent to stand at 87.23 million barrels a day.

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