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The Guardian: Oil price jumps to record levels

Terry Macalister guardian.co.uk
Wednesday February 27 2008

The price of oil reached $102 per barrel today – a second record is as many days – as traders switched their investments from shares and currencies into commodities amid growing fears of a US recession.

Light, sweet crude for April delivery reached $102.08 on the New York Mercantile Exchange while North Sea crude broke through the $100 mark for the first time in London.

“Commodities are moving and oil has gone with it. In terms of financial news, there’s nothing good coming out of the US at the moment,” said John Hall, managing director of energy consultant, John Hall Associates.

The latest change in the oil price was all about financial speculation and had little to do with physical oil movements, he said, pointing out that crude demand would be reduced if the American economy took a major turn for the worse.

But pressure on prices has risen in recent weeks on the back of fears that ministers from the Organisation of Petroleum Exporting Countries, who meet next week, could call for a cut in the cartel’s production.

The latest hike in the value of oil will embarrass UK North Sea operators which said earlier this week they needed more tax breaks if they were to meet government targets on future production of Britain’s oil and gas.

Record profits at Shell and British Gas parent, Centrica, have already led to a public outcry and helped trigger a competition inquiry by energy regulator Ofgem into the domestic supply market. The chancellor, Alistair Darling, has hinted at a windfall tax if companies to not do more to cut fuel poverty in Britain.

http://www.guardian.co.uk/business/2008/feb/27/oil.centricabusiness

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