Oil prices closed above $90 a barrel for the first time officially Thursday, on news that Lebanese troops had fired on Israeli warplanes. Even though the new conflict will not affect oil supplies directly, it would however indirectly “invite” other Middle-East countries such as Saudi Arabia and Iran into the whole hostile situation. The NYMEX Crude Oil closes at $90.46 after reaching the high of $90.60 earlier of the day in U.S.
During Friday Asian trading, the oil prices posted another new trading record at $91.10 on renewed concerns about oil supplies and news that OPEC won’t further increase output. Organization of Petroleum Exporting Countries Secretary General Abdalla el-Badri told The Wall Street Journal Asia on Thursday that the cartel is not in discussions to boost production by 500,000 barrels. The comments counter rumors that Saudi Arabia is pushing for another production increase after pressuring the group into one of similar size that goes into effect Nov. 1.
The combination of supply worries and geopolitical concerns has pushed crude oil prices up more than 6 percent since Tuesday and the uptrend is expected to continue. With the crude oil prices closed above the resistance and psychological of $90, you have every reason to worry. It means the price is starting to build its foundation with $90 as the new potential support level. And when the foundation building is done, the next level is $95 or $100. I bet not many would imagine oil prices at $100 a barrel six or three months ago.
But the reality is here to stay and you better prepare for the worst. Instead of worrying whether there’ll be fuel hike, why don’t you worry about the quantum of the hike? Hypothetically, I had blogged how the current administration might have found the solution to the high oil prices. But I stopped short of talking about the $100 a barrel possibility as I don’t think anyone can chew more than the $90 level then. Given the same hypothetically formula, now you might need to dig deeper into your pocket to pay additional 30 cents a litter to the petrol station to fill-up your fuel tank.
Talk about fuel hike of a whopping $1.20 on top of existing $1.92 a liter – that’s $3.12 a liter dude. Anyone care to quote government’s decade-long justification that Malaysia’s fuel price is still among the cheapest in the world?
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