The mystery behind surging oil prices

Latest inventory report shows big drop in crude. But overall supplies are still high, and U.S. economic growth is slowing. So what’s pushing prices up to $80 a barrel?

NEW YORK (CNNMoney.com) — What’s driving the run-up in oil prices to Wednesday’s record $80 a barrel?

Some short-term factors are plain to see. There’s the big drop in crude inventories and a reported shutdown of nearly 200,000 barrels from Alaska’s North Slope – a fourth of the region’s total output – and a gathering storm in the Atlantic.


Yet at the same time, crude inventories, while declining recently, remain above average for this time of year. And the United States has seen a string of weak economic numbers over the last several weeks, so weak that nearly all analysts expect the Federal Reserve to cut interests rates at their next meeting.

Add to this the end of summer driving season and the rise of oil prices to eight times what they were in the late 1990s remains something of a mystery.

CNNMoney.com