Think the Oil Prices are going up due to lack of supply?
According to an Article on 9 News, it's because Oil Traders are freaking out:
"Oil prices fell Wednesday as a key government report showed US petroleum supplies increased last week. Energy traders meanwhile continued to watch developments in Libya, where weeks of unrest showed no signs of easing.
Benchmark West Texas Intermediate crude for April delivery lost 64 cents to settle at $US104.38 a barrel on the New York Mercantile Exchange.
In London, Brent crude rose $2.88 to settle at $US115.94 per barrel on the ICE Futures exchange.
The report from the Energy Department's Energy Information Administration showed crude oil supplies grew by 2.5 million barrels. That's about what analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos, expected.
Gasoline supplies fell by 5.5 million barrels, almost twice the amount analysts forecast. Distillates, which include diesel and heating oil, shrank by four million barrels, also twice as much as analysts estimated. The nation's refineries operated at 82 per cent of capacity, slightly above expectations.
PFGBest analyst Phil Flynn attributed the steep decline in petrol supplies to refiners who were getting rid of winter blends as they switch to summer formulas intended to reduce smog.
With oil supplies abundant close to home, much of the focus remains on North Africa and the Middle East, and what may lie ahead for global supplies.
Anti-government unrest has shut down most of Libya's 1.6 million barrels per day of crude production. On Wednesday forces loyal to Moammar Gadhafi struck an oil pipeline and storage facility as they attacked rebels in at least two major cities.
Flynn said oil prices showed little reaction to the news because much of the risk to Libyan supplies has been priced in.
Traders are concerned that uprisings could spread to Saudi Arabia, the world's largest crude exporter and the most important member of the Organization of Petroleum Exporting Countries.
Saudi Arabia has increased production to make up for a drop in Libyan exports, but that is cutting into its surplus supply. Platts reports that OPEC's crude production rose last month by 230,000 barrels per day from January levels, to 29.8 million barrels per day.
"Should another country on the scale of Libya also exit the market, Saudi Arabia's spare capacities would be likely to fall to a critical level of less than two million barrels a day," analysts at Commerzbank in Frankfurt said.
Saudi Arabia controls most of the world's spare oil production capacity - about 4.5 million barrels a day. That spare capacity is viewed as a buffer against soaring oil prices as demand picks up in the global economic recovery.
"We should not panic," said Sara Akbar, the CEO of Kuwait Energy Co. "There is more than enough spare capacity to cover what has happened in Libya," she said.
Akbar and other prominent figures in global oil are meeting in Houston this week to discuss the state of the industry.
"There is no shortage of oil in the market," Algerian Minister of Energy and Mines Youcef Yousfi told reporters.
He said high prices are a result of the "hardly predictable logic" of oil traders.
"It's psychological," he said.
"When people see that the supply is at a normal level, the price will go down."
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