Brent oil price trading over $123 and heading skywards

8 April 2011 8 April 2011

BonTrade

Brent oil futures open Friday’s trading session near $123 a barrel and prices just keep heading skywards as investors look at the Middle East and assume that oil supply from the region will remain a concern for longer than imagined.

Latest Brent Oil Price

In London, Brent crude oil futures for May 2011 delivery was trading at $123.56 a barrel, 07.00 GMT this morning on the ICE Futures Exchange. The Brent contract closed Thursday’s trading session at $122.37.

Middle East and Oil Supply

“The more one looks at uprisings in the Middle East, the more one realises they will not be easy to resolve. At the same time, oil demand is relatively inelastic to higher prices.” according to a commodities trader.

Oil Supply Issues Drive Brent Higher

While there has been concern about a shortfall in supplies from the main oil producing nations (OPEC), the demand for oil has been increasing and global demand now stands near 90 million barrels per day.

“To make matters worse there are considerable constraints affecting the development of new oil supplies. Political risks in large, low cost oil producers like Iraq and Iran mean that companies face considerable difficulties and restrictions in investing in these countries” said Rajiv Biswas of IHS global insight.

He said the current events in North Africa and the Middle East are forcing companies to rethink their investment strategies.