Further up pattern in oil costs credited mostly to politics

Rising to above $90 a barrel, oil costs reached a level Tues not seen for more than two years. Gas and oil prices have been increasing for a number of reasons. A money eroding in value and harsh winter weather are the primary drivers. The extension of the Bush Tax slashes announced Tues, also as speculators betting prices will continue to rise, are also driving the increase in oil costs.

twenty six-month high with oil prices

The West TX Intermediate (WTI) crude oil price Tuesday climbed above $90 a barrel for the first time since October 2008. Oil pricing is typically based off WTI crude oil, also known as Texas light sweet crude. The New York Mercantile Exchange, or NYMEX, trades it as a commodity of oil futures too. The Energy Department explained that crude oil futures went up. At the very same time, U.S. inventories declined a bit. In just six weeks, the oil inventories went down by about 40 million barrels. The inventory is just likely to go down as well. The National Climate Service accounts the week ending Dec. 11 called for 16.3 percent more heating oil in the U.S. than normal. The normal energy demand is going up in Europe too with such cold temperatures.

Oil prices change due to Bush tax slashes

It seems as if an agreement might be made with President Obama saying the Bush tax slashes could get extended a year right when WTI crude oil costs surge. Of course, in exchange, Obama would want payroll taxes cut by 2 percent in 2011 and an extension of joblessness benefits. Oil prices and oil corporations look a little better if the economic recovery happens, which some investors suggest will occur using the Bush tax cuts. Stronger United States dollar had been keeping crude oil costs in check, however recent Federal Reserve monetary policy moves have eroded the dollar’s value. WTI crude oil futures have been bought by lots of traders too trying to hedge against the declining currency making costs go up.

Gas prices expected to rise in 2011

Speculators have pushed wholesale gas futures up by 55 cents a gallon over the last three months. There was more than a 10 percent increase in national gas prices. This was just in the last week too. U.S. customers can expect the pattern to continue. OPEC’s governor, an Iranian, said the rise in oil price doesn’t yet compensate for the fall in the money and that oil will soon reach $100 a barrel. Several of the energy analysts suggest that next year the gas costs will become high again. They might get near $4 a gallon.

Citations

International Business Times

ibtimes.com/articles/89539/20101207/crude-oil-breaks-above-90-as-obama-agrees-to-extend-tax-cuts-wti.htm

Bloomberg

bloomberg.com/news/2010-12-07/oil-trades-near-26-month-high-on-forecast-of-decline-in-u-s-crude-supply.html

Reuters

reuters.com/article/idUSN0732290620101207