Demand for oil and other basic commodities in the U.S. improved from the “very weak levels” seen late last year, but is still far below the level of recent years, writes former White House economic adviser Nouriel Roubini.
In his column in Forbes magazine, the economist and professor at New York University, writes that inventories of oil and oil products are definitely below their five-year average levels.
“Miles driven are estimated by the U.S. Department of Transportation to be at levels not seen since 2004. With gas prices higher, we may begin to see a consumption response,” writes Roubini.
The oil market, Roubini reckons, seems to be over-supplied. Inventories are ample, given the recent increase in OPEC and non-OPEC production. There is also high surplus capacity within OPEC.
“This supply, and a weak global economic recovery, could mute some of the pressure on the oil price,” says Roubini. “Fundamentals do not always drive prices—one might expect an oil price closer to $50-$55 per barrel today—but there can be restraints.”
During the second-half of this nearly completed year, the increase in the oil price was much more subdued than the oil spike and the rise in base metals last year.
Oil prices rose rapidly in the spring of 2009, then traded in a relatively narrow range around $75 per barrel for most of the year, Roubini notes.
Spot markets are more volatile, however. Global oil prices rose to near 79 dollars as traders expected that freezing weather in the United States would further strengthen demand for heating fuel, reports Agence France Presse.
© 2017 Newsmax. All rights reserved.