Black gold rising to the top?

In August 2006 the oil price, West Texas Intermediate, reached an all time high of around $80 per barrel. This rally had been driven by the war between Israel and Lebanon in June and July. Also, the hurricane season had put upward pressure on oil prices.

When the conflict ended and peace returned, the oil price was starting to drift lower. Following that peak, the WTI August contract began to descend sharply touching a bottom of around $55 at the beginning of the year. Since my column of May 29, WTI has now rallied by about 6% to reach the barrier of $70.


As I mentioned in my last column, the Dubai Mercantile Exchange took the initiative to open its doors to the oil trading business on June 1. Although the characteristics between Oman Crude Oil, WTI and the European Brent Crude are slightly different, the prices are to a certain extent correlated to each other. The same fundamentals apply to these commodities. Political tension in the world, hurricanes and strikes in oil producing countries will put pressure on all oil prices.

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