The $100 barrel of crude oil is careering round the corner, and though the plummeting dollar is cushioning the pain for Europeans, how much longer can that last?
Petrol and diesel prices are edging up. But you have to ask, how can it be that oil company profit is under pressure when the crude price has risen by 50% this year?
For example, Shell’s third-quarter figures were no more than satisfactory ($6.39 billion profits exceeded analists’ consensus expectations of $5.6 billion, but were lower than the $6.95 billion for the same period last year).
The answer is that more oil is being refined than extracted, forcing oil companies to buy more crude on the open market.
The ‘Big Oil spin’ from Shell says Hans Jager from stockwatch blog blikopdebeurs.com, is that the current market condition is the result of speculation, not oil shortages. And according to the European Tribune website, the price of oil in 1971 was already over $100 when corrected for inflation.
The Tribune also quotes a story of how the weekly Bloomberg survey of oil analysts and traders has only managed to correctly predict the direction of oil prices 53% of the time since the survey was introduced. Why not just toss a coin? Taken all together, and it feels to this non-economist that $100 is just the start.
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