Supply And Demand | featured news

America's soaring pump prices seem to defy the laws of supply and demand, except for one fact: It's increasingly not just about us.

Oil consumption rose by its fastest rate since 2004 last year, according to the latest statistics from BP. The news came as members of the Opec oil cartel failed to agree on increasing oil production as a way of lowering prices. Analysts had expected the Vienna meeting to raise output. As a result, oil prices jumped again on fears of limited supply. The value of a barrel of Brent crude rose back above $118 a barrel.

Rex Tillerson, the boss of ExxonMobil admitted last week that the price of oil–based purely on supply and demand- should be in the $60 to $70 a barrel range. The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds.

The average retail price for gasoline dipped below $2.50 a gallon for the first time in two months Monday as swelling oil supplies and slumping demand overshadowed even a fire at a major U.S. refinery.

Orders for goods expected to last at least three years fell unexpectedly in August due mainly to a sharp drop in demand for commercial aircraft.

Oil prices fell 3.2% Monday, to below $70 a barrel, as further signs of weak fuel demand raised expectations that prices may have raced ahead of the nascent economic recovery.

OPEC lowered its five-year forecast for oil-field spending by about a third as the recession and increased energy efficiency led to a steep cut in demand estimates.

Crude oil rose to a seven-month high and gasoline surged after Goldman Sachs Group Inc. said prices may reach $85 by the end of the year as demand recovers and supplies shrink.