For the past few months the various economic indicators which tell analysts which way the economy is heading have delivered good news. Consistent with those barometers such as job rate and unemployment rate is the cost of oil, which is proving stable, hovering at around $107 per barrel on Thursday in Asia.
Investor Confidence
The oil price reflects increased investor confidence which is a result of an improving US economy.
April delivery of benchmark oil dropped 10 cents a barrel to $106.97 at midnight in Singapore in the electronic trading which took place on the New York Mercantile Exchange. The same contract went up on Wednesday by 52 cents, reaching $107.07 a barrel in New York.
In London Brent crude rose by 8 cents to $122.74 per barrel.
Manufacturing and Economy Up
During the fourth quarter of 2011 the US economy rose by 3 percent, a bit higher than the 2.8 percent that was forecast. In other good news the Institute for Supply Management-Chicago said manufacturing in the Midwest section of the US climbed to a ten-month high in February.
These recent numbers strengthen the mostly positive economic stats coming from the US during the last several months. The better than forecast US economic growth, along with actions taken by central banks to increase the global money supply together have help to boost the price of crude up to close to $110 earlier this week from $75 in October.
Iran in Equation
There is also worry that Iran’s nuclear program will eventually lead to some kind of violent encounter causing disruptions in the supply of crude oil, keeping the price of oil near its highest points in nine-months. Europe and the US are placing sanctions on Iran while Iran threatens to cut oil supplies to certain countries and blockading oil tankers as they pass through the Strait of Hormuz in the Persian Gulf.
“Rising tensions in the Middle East could easily add another $20 to $40 to oil prices,” Bank of America Merrill Lynch said in a report. “A geopolitically prompted supply side shock is ultimately what most investors are concerned about.”
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