Oil Prices Back on the Rise
December 10th, 2006 | by Brian Carr |Thanks in large part to dropping temperatures, fears of increased production cuts and violence in Nigeria, the price of oil climbed back over $63 per barrel to close at $63.23.
It appears the biggest factor regarding the direction of the price of oil is whether or not the Organization of Petroleum Exporting Countries (OPEC) decides to increase oil production cuts. Back in October, OPEC agreed to begin cutting oil production by about 1.2 million barrels per day in order to help stabilize the price of oil after it had fallen over 25% from this summer’s record highs.
There has been a push from several people within OPEC to increase the oil production cuts although key figures within OPEC have publicly stated they felt there is currently a reasonable balance between supply and demand and that further production cuts will not be necessary.
In addition to the possible production cuts, there have been several militant attacks on Nigerian oil production facilities within the past month; however these attacks have had very minimal effects on oil output. However, many traders are fearful these attacks will spread to other facilities and, if successful, cause massive reductions in output.
In turn, the average price for a gallon of gasoline has risen to $2.30, which is up about 5% from when gas bottomed out at $2.18 per gallon in late October and early November.
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