Crude oil peaked near $72 a barrel today, with intra-day trading hitting a seven-month high of $71.79 on the New York Mercantile Exchange. In 2009 alone, the price per barrel of crude oil has risen 60%.
On the NYMEX, crude settled at $71.14, which is a 1.6% increase or a jump of $1.13 over Tuesday's close of $70.01. The price of oil has continued to rise in electronic trading after the NYMEX floor closed.
On Wednesday, London's Brent crude also saw increases, with a rise of 93 cents to $70.55 on the ICE for July delivery. This represents a 1.3% climb for the day.
Natural gas fell slightly, closing less than 1% lower at $3.721.
Factors that helped to push the price of crude include a report from the US Department of Energy revealing that US commercial crude oil inventories fell from the previous week 4.4 million barrels for the week ending June 5.
Also, British oil super-major BP reported Wednesday in its annual Statistical Review of World Energy that worldwide proven oil reserves fell in 2008 by 3 billion barrels, the first time a drop has occurred since 1998.
The recent rally is in-line with seasonal demand picking up, according to Darin Newsom, senior analyst with DTN, a market information service in Omaha, Nebraska.
"With gasoline, we're still seeing some seasonal demand picking up, and so that's helped push the Futures market over $2," said Newsom. "We saw a draw down in stocks again today. Again, not overly surprising, all this is just as it should be this time of year, up to the Fourth of July."
"Crude oil is holding on that as well," he said. "Crude oil is following the gasoline demand this time of year."
As for other factors that may be affecting the price of crude oil, the analyst explained that speculative money is also pushing up the prices.
"I think there's some non-commercial money coming in," Newsom said. "They're looking at the recent weakness of the dollar, even though we did see it rally late last week, early this week. There are still some concerns over inflation."
"They're looking out across the way and seeing markets, such as gold and copper and silver, rallying," Newsom continued. "And so you're getting some money coming into the crude oil market as an inflation hedge. But I just don’t think the fundamentals in the crude oil market are going to allow it to stay as strong as the gold market in the long run."
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