Investors watch rising energy costs

Morris Beschloss
Special to The Desert Sun
February 27, 2005
The Paris-based International Energy Agency’s recent pessimistic update about the world’s oil supply/demand inversion set off global alarm bells. This was a major turnaround from a previous projection issued by the respected international agency before the end of last year.

With the IEA trumpeting increased global demand, combined with a cutback in non-OPEC production, the New York Mercantile Exchange oil traders returned per diem oil prices back to the high 40’s per barrel. Only two months ago, oil prices had retreated back to the $40 per barrel range. The early winter weather in the Northeast was exceptionally mild, and it looked as if oil prices in the 30’s were only a matter of time.

The timing of the IEA announcement was particularly ominous as the first quarter has historically proven to be the weakest in demand, coming between peak heating demand and the multi-month driving season.

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