Promising news about the bettering economies of US and the Europe has led to a sharp rise in oil prices. On December 20, 2011 Benchmark crude witnessed a 3.6 % increase, which was an increase by $3.34 to reach $97.22 a barrel in New York. Brent crude similarly, used for pricing imported oil to US also witnessed a 3% increase and rose by $3.09 percent to reach $106.73 a barrel in London.
Following oil, stock indexes of major companies too soared by an average of 3 percent.
There was encouraging news about the economy and this sparked off this rise. Germany had reports that the confidence of consumers and that in business rose remarkably in December; likewise Spain’s borrowing expenses dipped following a promise that there would be better measures to combat debt issues.
In US similarly, the government reported that apartment constructions and building permits soared since November. Holiday selling also reported higher leaps. The analysts comment that with a rise in spending and construction by the consumers, oil prices are bound to rise.
However as reported by Phil Flynn, PFGBest analyst, political turbulence in Kazakhstan is yet another concerning factor; Kazakhstan being a remarkable exporter of oil (1.3 million barrels a day): the nation located in Central Asia has lost about 15 people owing to the battles and political protests. `Flynn added that it has caught tremendous attention, more so because of the emergency imposed by the President of Kazakhstan last weekend.
The nation is although a menial exporter of oil, but considering the fact that the oil supplies are utterly tight, any sort of disrupted supply might cause ripples in the entire oil market.
The US also has been reported to be cutting down on gas; it’s been 10 months now. The demand has dropped by an average of 4.2 percent.
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