Spot Crude Oil Trading Higher on Strike Concerns
February 23rd, 2010 Posted in Oil and Precious Metals
Spot crude oil finished yesterday’s trading session above the significant price level of $80, almost touching a six-week high. This comes on the heels of a refinery strike in France that has aroused short term supply concerns. The strike in France highlights the market forces at work surrounding spot crude oil.
Workers of the French oil company Total walked off their job at the company’s refineries in protest of the scheduled shutdown of a refinery. The refinery employs 370 workers. Total’s refinery workers have been on strike for the second week and a quick end to the dispute does not seem likely. Workers at a French refinery of Exxon have also pledged to walk off the job in support of the protesters.
The refinery worker strike in France highlights the market forces at play. Fledging demand for crude oil is driving oil companies to reduce their output of crude oil which they supply to the end users for consumption. The refineries are attempting to strike a balance between slumping demand for the commodity by lowering the supply of crude oil in the market. The economics are fairly simple. Reduce the supply of crude oil in the market and the price of spot crude oil will rise.
These actions by crude oil refineries, along with the potential for a larger strike in France may be helping to support the rising price of spot crude oil. The strategy may continue to increase spot crude oil prices in the short term. The next major resistance level for spot crude oil rests at $83.90.
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Tags: Commodities, Crude Oil Resistance Level, Crude Oil Resistance Line, dollar, Forex Trading, spot crude oil, spot crude oil prices, spot crude oil trading
