Crude Prices Surge after Bernanke Speech

The crude price per barrel recently surged by 1.7% after a speech by Federal Reserve Chairman Ben Bernanke signified that the central bank will exert more effort to fix the economy of the United States.

The price of U.S. benchmark WTI gained $1.59 to $96.21. Similarly, Brent moved higher by $1.49 per barrel to $114.14. During the yearly Fed conference, Chairman Ben Bernanke said that the recovery of the economy is still unsatisfactory. However, he didn’t mention any specific timetable for efforts that may lower borrowing costs and strengthen economic growth.

In case the Fed lowers borrowing costs, it could increase demand for the energy sources required to spur growth, thereby making crude and other products more appealing investments.

The crude price per barrel has ranged from $94 to $97 in the last couple of weeks, and analysts anticipate it to maintain that range until September. The demand for oil worldwide is slightly increasing, but supplies are sufficient. However, continued worries regarding the conflict between the West and Iran will keep the current oil prices from falling. Expectations of monetary stimulus programs coming from the central banks of the United States and Europe will also continue to support the market.

Hurricane Isaac didn’t  have a huge impact on the current oil prices, even if a majority of the U.S. Gulf of Mexico’s entire crude production was shut down, as a standard safety precaution, because of the storm. Output is anticipated to go back to normal in the coming days.

Current gasoline prices in the U.S. reflect a high increase last week after the storm pushed some refineries in the Gulf Coast to close down or produce at decreasing levels. However, the significant spike is now behind us, and gasoline prices are anticipated to begin dropping after Labor Day, the summer’s last major driving weekend. The average gasoline price today gained almost a cent to $3.83 a gallon, according to the OPIS, Wright Express and AAA.

Elsewhere in the energy markets, the price of heating oil increased 2 cents to $3.16 per gallon. That of wholesale gas moved up by 4 cents to $2.94 per gallon. Natural gas prices rose 3 cents at $2.78 for every 1,000 cubic feet.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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