Brent Oil a whisker from US$70 a barrel

Quietly Brent oil has been glidng up and hit a 7 month high of 69.59 dollars a barrel Friday. Whilst there are concerns that with the US driving season approaching demand will strengthen the market is very nervous about Middle East developments. Goldman Sachs increased its 3 month price forecast for London Brent by US$1 to US$70, and raised its 6 month forecast by 50 cents toUS$ 72. It is this price that is the benchmark for the 20mn barrels that are traded every day of crude oil.

The other benchmark is the West Texas Index (WTI) whai over the last two months has drifted lower for very specific and local condition of the US market. At the end of the week New York Mercantile Exchange’s WTI traded at US$63. There are as many reasons given as you chase seekers of the truth. Essentially WTI is the internal US market and Brent is oil actually on board tankers that can land anyhwere. Essentially it reflects the deep concern in the shipping markets that oil traded at sea may be difficult to replace at the oil terminal with all the concerns in the Gulf, declining North Sea resevoirs, bombs in Algeria.

The average US pump price of unleaded is US$2.819 a gallon (3.79 litres).