Oil market may be ahead of itself
Stacks of empty barrels used to hold fuel in Baghdad
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Bill Radke: This morning, crude oil is at around $83.50 a barrel. You may remember about a year ago, it was more like $52. And that run up in price, according to the International Energy Agency, that's overheated. This morning, the IEA said another big jump could be a blow to the global economic recovery. And we get the story from Marketplace's Stephen Beard in London.
Stephen Beard: The IEA reports that global stockpiles of fuel are relatively high, and oil producers still appear to have plenty of the stuff to pump. Meanwhile, the agency says, demand for oil throughout the industrialized world is sluggish. Europe's manufacturing-led recovery seems to be ebbing.
David Fyfe, editor of the report, says the signs are the oil market has got ahead of itself:
David Fyfe: Prices at or above $85 seem to have moved somewhat ahead of the market supply/demand fundamentals. Underlying fundamentals don't look incredibly tight at the moment.
Nevertheless, other oil market observers say there could be a big surge in demand from Asia in the months ahead. And in the longer term, a report from the U.S. military paints an alarming picture of future supply. It predicts that global oil production will peak within two years, and there could be shortages by 2015.
In London, this is Stephen Beard for Marketplace.