Financial Market

The price of crude oil today reached a new high as the black gold hit the $142 a barrel mark, after concerns entered the market that oil producing nations could not meet the demand of the market.

On the London exchange Brent crude hit $142.13 a barrel and in New York light crude climbed to $142.26.

The cartel of oil producing nations OPEC has found itself under increasing pressure to raise production quotas which would ease concern and help bring prices below current levels, however the cartel seems to be split as to the whether it should raise output.

Saudi Arabia recently invited senior members from oil producing countries to discuss what to do about oil. It seems the case that many OPEC members, and senior figures in other oil producing nations, still have clear memories of the crash in oil prices a decade ago after the Asian financial crisis which lead to oil plummeting to $10.

It is these memories know as the “ghost of Jakarta” that apparently explains the reluctance of OPEC members to increase output in order to artificially lower prices.

Raising further concerns within the industry, Libya has recently threatened to cut production saying that the market is well supplied. This statement is thought to be in response to threats from the US against oil producing nations.

In the US the House of Representatives recently passed a bill allowing the Justice Department to sue OPEC members for restricting supplies and setting prices. The bill has not been voted on by the senate and the white house has already threatened to veto the bill.

Oil prices have continually been pushed higher recently by the combination of a weak dollar and concerns about volatile geopolitical situations that could disrupt supply.

Many analysts are now predicting the upward trend to continue, with Tom Pawlicki, an analyst with MF Global in Chicago stating:

“I think the up trend is going to continue, we could move up toward $150 over the next few weeks.”