Oil prices up 30% in May – Nearing OPEC’s stated $75/bbl goal
Oil consumers are in for a painful case of deja-vu this summer as oil prices continue to recover from last fall’s collapse. The “double hockeystick” hook at the end of the historic oil price charts continues moving upwards faster than anytime in recent history (up 30% this month – the fastest climb since the March 1999) to settle yesterday over $66/bbl – only $9 off OPEC’s “preferred” price of $75/bbl.
Nothing of merit has changed in our transportation energy sector – we still have the same petroleum-only supply/distribution/consumption system as before. Despite the continued general stagnation in demand, price controlling cuts in production imposed by OPEC seem to be having an effect on market prices. While crude continues to be stockpiled in ships and shore based storage facilities, somehow the price continues to recover – approaching half of the record highs of last July.
Indeed there is nothing now in the way in terms of resistance between here and the next target in the medium term which is at $73.40, which would make the price of oil close to that suggested by the OPEC ministers at their meeting in Vienna yesterday where they intimated that a $75 a barrel would not be unacceptable.
It took a world-wide economic collapse to stop last year’s run on oil prices. The collapse was triggered by skyrocketing oil prices and the world’s inability to keep up with the extortion payments. With the world economy still trying to restart itself, a new run-up of oil prices will at least slow recovery – possibly causing a second collapse we may not have the capacity to recover from.
While America fiddles with remaking the auto-industry and busies itself bankrolling pet projects that can not cure our oil addiction, the market is preparing a second swipe at our wallets.