Spring Break
Oil prices predicted to rise
Zohaib Ahmad
Issue date: 6/5/09 Section: News
Drivers face rising prices at the gas pump as investors and oil-producing countries anticipate a global economic recovery, according to Time magazine.
"The future for oil prices is up, up, up," Shawkat Hammoudeh, professor of economics and international business at Drexel, said.
The Organization of the Petroleum Exporting Countries, a cartel of countries supplying 40 percent of the world's oil, voted in Vienna to maintain output at current levels rather than increase supply to bring relief to consumers May 28.
OPEC also decided to keep production quotas unchanged.
The price of oil climbed to a six-month high of $66 per barrel last week. Oil futures on the New York Mercantile Exchange have risen 36 percent in just two weeks.
According to Hammoudeh, an associate editor of Global Business and Economics, oil prices depend on either the fundamentals of supply and demand or on macroeconomic indicators such as the stock market.
"Oil prices are looking up for indicators despite its fundamentals," Hammoudeh said.
Currently, if the stock market increases, oil prices will too. This is also because speculators are back in the market, pushing the prices higher.
"Prices will continuously go up or expect a correction," Hammoudeh said.
Hammoudeh stated that technology also becomes a factor with oil prices. According to Hammoudeh, gas prices rise twice during the summer: Memorial Day weekend and the Fourth of July.
Yet, Saudi Oil Minister Ali al-Naimi, according to TimeOPEC's key power player, said this rise is on track with OPEC's targets.
"Demand is picking up, especially in Asia. The price rise is a function of optimism that better things are coming in the future," al-Naimi told reporters in Vienna.
According to Hammoudeh, the majority faction of OPEC led by Saudi Arabia is in the view that the world economy cannot handle over $80 dollars a barrel, given the current economic situation.
According to Time, this action is beneficial to the countries in OPEC, whom would be vulnerable to a drawn-out recession.
"The future for oil prices is up, up, up," Shawkat Hammoudeh, professor of economics and international business at Drexel, said.
The Organization of the Petroleum Exporting Countries, a cartel of countries supplying 40 percent of the world's oil, voted in Vienna to maintain output at current levels rather than increase supply to bring relief to consumers May 28.
OPEC also decided to keep production quotas unchanged.
The price of oil climbed to a six-month high of $66 per barrel last week. Oil futures on the New York Mercantile Exchange have risen 36 percent in just two weeks.
According to Hammoudeh, an associate editor of Global Business and Economics, oil prices depend on either the fundamentals of supply and demand or on macroeconomic indicators such as the stock market.
"Oil prices are looking up for indicators despite its fundamentals," Hammoudeh said.
Currently, if the stock market increases, oil prices will too. This is also because speculators are back in the market, pushing the prices higher.
"Prices will continuously go up or expect a correction," Hammoudeh said.
Hammoudeh stated that technology also becomes a factor with oil prices. According to Hammoudeh, gas prices rise twice during the summer: Memorial Day weekend and the Fourth of July.
Yet, Saudi Oil Minister Ali al-Naimi, according to TimeOPEC's key power player, said this rise is on track with OPEC's targets.
"Demand is picking up, especially in Asia. The price rise is a function of optimism that better things are coming in the future," al-Naimi told reporters in Vienna.
According to Hammoudeh, the majority faction of OPEC led by Saudi Arabia is in the view that the world economy cannot handle over $80 dollars a barrel, given the current economic situation.
According to Time, this action is beneficial to the countries in OPEC, whom would be vulnerable to a drawn-out recession.
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