Oil price increasing due to lack of supply

Calcutta News.Net
Monday 24th January, 2011

An oil industry group has said high demand and a lack of supply are behind the recent upward trend in the oil price, with prices expected to rise further.

The American Petroleum Institute hasn’t made any particular predictions, but has said that unless supply increases, prices will ultimately climb.

In 2010, oil demand globally reached 87 million barrels a day, driven by economic growth in China, the Middle East and India.

Meanwhile, OPEC supply controls, a drilling moratorium in the Gulf of Mexico and slow production in non-OPEC countries is holding back supply.

The moratorium on drilling in the Gulf of Mexico has been lifted, but new permits have been slow in coming, cutting back US oil supply by over 120,000 barrels per day.

The oil price is rising at time of weak economic growth in the world economy, with the price of petrol in the United States at US $3.12 per gallon, just one dollar less than the all-time highs seen during the boom years of 2006/07.

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