In yesterday’s trading, the oil prices went up and crossed $99 a barrel. The latest price rise is attributed to the fact that the U.S. economy is faring better than expected and in due course the expectations are that it will help in generating higher demand for energy including oil and natural gas.
On the better prospects in the energy sector thanks to higher than expected GDP growth, benchmark U.S. oil for February delivery rose 31 cents to close at $99.22 in a shortened session on the New York Mercantile Exchange. Earlier, the WTI crude prices which were falling due to stockpiling also increased to some extent.
Overall Economic Growth is leading to Higher Energy Consumption
According to the U.S. government reports, orders for long-lasting manufactured products have increased to some extent wherein it has gone up by 3.5 percent in November. In fact, core capital goods also increased significantly as it achieved a growth of 4.5 percent which is the biggest gain since January this year.
Amidst higher consumption and depleting stockpiles, the oil prices went up around 7 percent so far in December. Estimates are being made that if this continues, the oil may finish the year with a gain. The increases in energy consumption and hopes over the US economy have been behind the rise for quite some time.
As the data from the US government show that country’s economy grew at an annualized rate of 4.1 percent in the third quarter, investors believe that it will enhance all sectors including of oil as consumption will be driven by the positive data. Though the U.S. is expected to increase crude production during the winter, the consumption of oil and natural gas goes higher.
Though earlier this month and before that the U.S. had stockpiled huge quantities of crude which led to decline in oil prices, data for the week ending Dec. 20 are expected to show a draw of 2.3 million barrels in crude oil stocks. The decline in the stockpiles of oil will help oil go higher.
Additionally, the American Petroleum Institute is expected to come with a release; the data is awaited. Earlier in a statement, the OPEC did not agree for decrease in the production of crude by the member countries even when Iran will start putting additional oil and Libya will soon be on track.
To contact the reporter of this story: Jonathan Millet at email@example.com