Investors grapple with new crude shock

What now for oil prices? More than at any time over the past three decades apart from the two Gulf wars, the answer depends on politics.

The wave of revolutionary zeal sweeping the Middle East over the past month has overturned long-held assumptions about the stability of supply from a region that accounts for 40 per cent of the world’s production and 57 per cent of reserves. Fundamental analysis of supply and demand has gone out the window.

Brent crude, the European benchmark, was trading at about $116 a barrel on Friday, below the level of nearly $120 touched last week. But trading remains nervy. Olivier Jakob of Petromatrix says that the market “currently lives and dies by the rumour”. Predicting where prices are headed depends on which of several scenarios plays out.

Read Full Article from Financial Times

- Posted: 2011-03-04 14:02:09

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