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Marketplace Morning Report

Storage one culprit of higher oil prices

Stephen Beard May 27, 2009
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Bill Radke: the price of oil keeps rising — it’s above $63 a barrel this morning — that’s a six-month high — and Saudi Arabia’s oil minister says it’ll keep on climbing. The minister made his comments today ahead of tomorrow’s OPEC meeting in Vienna. From the European Desk Stephen Beard reports.


Stephen Beard: The oil minister, Ali Naimi, says that global demand for crude is picking up. He claims that consumption in China is rising strongly. And that’s already been reflected in the recent price rise. Naimi says we could easily see oil hit $75 to $80 a barrel later this year.

But many analysts are rather less bullish about crude. Simon Wardell of Global Insight says we’re not seeing much higher consumption, just higher storage. Speculators are buying oil and storing it in the hope of higher prices.

Simon Wardell: We do continue to see inventories rising. In fact, there’s a lot of speculation that we might actually run out of storage some time in the next four to six weeks because we still have a surplus in the market.

Wardell says if world oil storage capacity does run out within the next few weeks, the price of crude could drop like a stone.

In London, this is Stephen Beard for Marketplace.

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