Oil demand has not yet started to rise. Every possible place there is to store oil is being used, and the world oil supply is relatively steady right now.
Yet oil prices are rising with the stock market, on hopes that the world economy will start to become stronger.
If this keeps up, rising oil prices could potentially kill any serious economic recovery. And then the cycle will repeat itself.
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The June 2, 2009 Peak Oil Review starts like this:
1. Production and Prices
Oil prices surged to a six-month high above $66 a barrel last week, despite protests from most observers that fundamentals of supply and demand did not support such a move. A combination of factors was behind the sudden rise. Most important was the fall of the US dollar to a recent low of $1.41 against the Euro, sending traders into commodities for protection. An unexpectedly large drop in the US crude inventory of 5.4 million barrels and statements by the Saudi Oil minister that demand for oil from Asia was picking up contributed to the increase. Other drivers behind the move were an increase in consumer confidence in the US; a 5.8 percent growth in India’s GDP in the first quarter; a 5.2 percent increase in Japan’s industrial production; and a statement from OPEC’s Secretary General that oil prices may reach $70 to $75 by the end of the year.
Oil prices surged to a six-month high above $66 a barrel last week, despite protests from most observers that fundamentals of supply and demand did not support such a move. A combination of factors was behind the sudden rise. Most important was the fall of the US dollar to a recent low of $1.41 against the Euro, sending traders into commodities for protection. An unexpectedly large drop in the US crude inventory of 5.4 million barrels and statements by the Saudi Oil minister that demand for oil from Asia was picking up contributed to the increase. Other drivers behind the move were an increase in consumer confidence in the US; a 5.8 percent growth in India’s GDP in the first quarter; a 5.2 percent increase in Japan’s industrial production; and a statement from OPEC’s Secretary General that oil prices may reach $70 to $75 by the end of the year.