Commodity Daily News

Thin Market Helps Extend Oil Price Gains

Traders watching the price of oil climbing with despair were disheartened yesterday as shifts in risk sentiment and thin holiday trading conditions helped push the price of oil over $112 a barrel. Both US President Barack Obama and ministers from the Organization of Petroleum Exporting Countries (OPEC) have affirmed that current oil supply levels are adequate for global demand, arguing that speculation is a prominent factor driving the price to its recent highs.

Looking through a variety of recent analyses may support this notion given that most expect either continued unrest in the Middle East-North Africa (MENA) region, or a flare-up of new conflicts as tensions continue to spread. This expectation convinces many large investors to bet on a rising price, thus driving the price higher than it otherwise would be, exactly the sentiment President Obama made in a town hall meeting in Virginia just days ago. If true, oil traders may continue to expect rising prices through the days ahead since such speculation is not likely to come to an end anytime soon.