The yardstick North Sea Brent crude oil spot price has recovered above the $100 pb level as predicted might happen in last month's blog. It is now hovering around $106-108 pb having risen slightly each day for the past few days.
The consensus is that OPEC would like to see the price settle between $105-$110. Until now higher than normal US oil stocks and perceived weakness in the world economy have dampened sentiment with only threats to supply being made by Iran balancing this out. Last month however saw increased housing starts in the US as well as higher demand for gasoline (petrol) which is likely the reason for the present recovery above $100. There was a threat from Iran to close off the Straits of Hormuz, the major export route for Gulf oil but it was also announced that the pipelines designed to by-pass the Straits are now open. Closing off the Straits would certainly be a reason for the price of oil to rise sharply despite the new alternative route. It would undoubtedly result in a response from the US and the possibility of armed confrontation and result in huge middle east tensions. Lets hope that it does not come to that especially as it seems there may be some "green shoots" attempting to push up despite the World economic situation. With no reliable crystal ball available I am going to guess that the oil price may trend a little higher if US economic stats continue to show improvements, however slight they might be......
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