Current Oil Price above $93 on Economic Stimulus Hopes in China

The current oil price stayed above $93 per barrel as a fall in China’s inflation strengthened expectations for additional economic stimulus measures that may increase crude demand within the country.

The oil price per barrel in the NYMEX was 22 cents higher, at $93.57, during the early afternoon in Europe. In the previous day, there was a 32-cent drop in the contract to end the electronic trading day at $93.35. In London’s ICE Futures Exchange, there was a 24-cent increase in the oil price per barrel of Brent to $112.38.

The current crude price reflects a sharp increase from its June level of below $78 in the midst of hopes that Europe, China and US policymakers will implement fiscal and monetary stimulus measures as a way to reverse the slow growth of the global economy.

Lower than anticipated crude output of non-OPEC countries combined with the latest refinery and pipeline accidents have also aided in raising prices, particularly for crude oil finished products.

China recently announced that its rate of inflation further dropped in July, giving the government extra room to boost growth in the event the country’s economy, as the second biggest in the world, suffers a severe slowdown.

Moreover, analysts are watching Syria’s continuing political upheaval. Although Syria is not a primary producer of crude, its chaotic civil war may weaken the stability of neighboring countries which include huge oil producing countries like Saudi Arabia, Iraq, Kuwait and Iran.

The U.S. will soon be reporting its initial unemployment claims per week, its trade balance from June and its data of wholesale inventories in the same month.

In other energy news, the cost of wholesale gas is 0.55-cent higher at $2.9859 per gallon. Heating oil was higher by 0.75 cent at $3.0234. The price of natural gas fell by 2.1 cents at $2.912 for every thousand 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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