The East Coast's Big Blizzard Isn't Cooling Oil Prices

Oil prices stayed on their upward track in the last week of 2010, helped in part by a crippling blizzard that slammed the U.S. Eastern Seaboard Christmas weekend and into the new week. Crude moved higher to $91.50 a barrel, as OPEC's Arab ministers met in Cairo to discuss cartel strategy. Their decision to keep output unchanged combined with traders now foreseeing a greater need for heating oil as winter has hit much harder -- and earlier -- than expected is keeping upward pressure on crude prices.

U.S. forecasters believe that the winter of 2010-2011 may be one of the coldest on record. Europe, which recently faced its own blizzard, may have its coldest winter in decades as well. Oddly enough, many scientists blame global warming for the weather, at least partly because as the Arctic ice cap melts, it sends cold water south by way of the oceans.

On the other side of the world, record low temperatures have been recorded in the northern parts of Korea and China, a weather pattern that experts expect to continue.

OPEC has often come to the rescue of nations that are drawing down their oil reserves, but cartel ministers are not calling for any increases in production this winter. The global economy can withstand an oil price of $100 a barrel, Kuwait's oil minister said, according to Reuters.

Another bullish factor is increased demand from manufacturers in China, which is the largest net importer of oil. With crude seeing additional demand as the developed nations recover, the result could be price rises well into 2011. Unless, of course, China's Christmas weekend interest rate hike has the intended effect of slowing that nation's superhot economy, with the attendent ripple effects spreading to its major Western trading partners. Until then, old man winter may have more sway over oil prices.

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kmills1019

Oil companies have no interest in rapidly increasing supply. Invest hundreds of millions of dollars to make the price of crude and their profits go down. That is not a good business plan. Remember the accident in the gulf? They were capping that well.
They are better off complaining about where they can not drill and acting like supplies are short. I do not know about now but right before Christmas crude oil stockpiles were 4% higher than last year and gasoline supplies were .8% higher. Not exactly a glut but not a shortage either.
Republicans and Democrats need to work together to find a long term solution. We, as the public, need to quit buying into the hype the oil companies put out that they would bring prices down if they could only put a well everywhere they want to. They have hundreds of millions of acres available to them they are not drilling on now.
The oil companies do not have our interests at heart, they are in it to make a lot of money.

January 09 2011 at 9:46 AM Report abuse rate up rate down Reply
procompdynamics

It's already been said that we will see 5 dollars a gallon by 2012. I'm betting before that.

December 28 2010 at 4:54 AM Report abuse rate up rate down Reply
WILLS

Interesting to read the comments -

Hey people, it's not about drilling as current supplies are adequate. The price factor is really about speculation and refinery output, and the output end is controlled by you know who. If anyone really want to know what is going on, than first understand the refining process. It's basically a big still and gas has to get "cracked", the other fuels coming off are not as needy and can go "as they are". That includes kerosene, diesel and fuel oils. It is also normal for the refinery to process more heating oil than diesel in preparation for winter. Therefore, if anything should be going up in price, it should be diesel, not gas.
Since there has not been a NEW refinery built in the U.S. in the last 30 years or so, it tells a story of the big oil companies wishing to remain in charge and it real easy to slow production since they control all of the output. The speculators push the price and the oil companies oblige by cutting output. While this amounts to little more than "price fixing" it's difficult to prove as there is little evidence to link big oil to the speculators. It's simply an opportune event - and big oil will jump on - every time. Please do not blame Obama or the Saudi's. The Saudi's have stated that they would be content with a 72.00 a barrel price and Obama can not have the A.G. or the SEC go after people that are not breaking any laws! I doubt that either party likes the result either. The real bitch of all is that it benefits Hugo Chavez, and he hates the U.S.! Yes, something should be done, but what? To this I have a suggestion, primarily for Obama. TAKE REFINERY OUTPUT LEVELS FROM THE LAST 5 YEARS AND SEE IF THEY ARE CONSTANT. IF THEY HAVE DROPPED SIGNIFICANTLY IN THE LAST 3 MONTHS, BEGIN A PRICE FIXING CASE, PROSECUTE, AND THROW THE RESPONSIBLE IN THE CAN AND FINE ALL INVOLVED UNDER THE EXCESS PROFITS ACTS OF THE 80'S.

December 27 2010 at 5:47 PM Report abuse rate up rate down Reply
1 reply to WILLS's comment
johnskii

Yes!!! Why doesn't someone prosecute??? I am an Independent for decades. The Democrats are blaming both Bushes but the Democrats have had control of the Congress and Presidentcy for two full years. Why wasn't any legislation passed reigning in the oil companies/lobby/speculators in that period??? WHY?????

December 27 2010 at 7:45 PM Report abuse rate up rate down Reply
pyps

Here is a thought. How about the giant non tax paying companies take the profits they make and reduce the price if oil. Gas prices and heating oil will be lowere. The economy an surely use this kind of money being pumped into it. Just an easy thought.

December 27 2010 at 3:53 PM Report abuse -1 rate up rate down Reply
1 reply to pyps's comment
Sonny

Why don't you just take everyone's money and redistribute it. That would be fair. Just think what would happen...............because that is where we are headed.

December 27 2010 at 5:25 PM Report abuse +1 rate up rate down Reply
pyps

Why is that jackass keep commenting with Blah, Blah, Blah. Sounds like a mule to me. Nothing to add, agree or disagree with.

December 27 2010 at 3:49 PM Report abuse rate up rate down Reply
tony

thoes scumbags should buy medicen with the money they make on the oil rotten bastards people here cant aford the scam of the price of oil

December 27 2010 at 12:52 PM Report abuse -1 rate up rate down Reply
duke37355

I saw the price of gas change on christmas eve and again on christmas day at the same station. This crap is unbelievable. Obama needs to let the drilling begin here to lower our energy cost. Its been rising faster ever since he has not allowed drilling in the gulf. He needs to pull his head from the sand and look at what is going on around him. I know he don't buy any gas.

December 27 2010 at 12:28 PM Report abuse rate up rate down Reply
1 reply to duke37355's comment
kmills1019

The gulf is no longer off limits to drilling. The oil companies have no economic interest in raising the supply of crude.

January 09 2011 at 9:49 AM Report abuse rate up rate down Reply
johnskii

Yes cold winter weather is here forcing many people to stay home and flights to be halted, the Euro is down, people are buying more gas efficient vehicles and/or electric-hybrids, people are switching from home heating oil to alternative sources of heat, etc.....Plus generally people are sick of the manipulated, artificial generated prices of oil/gas products...Look like a bright future for oil!!! ;-)

December 27 2010 at 12:06 PM Report abuse +1 rate up rate down Reply
fordbrandt

I guess we are paying for the Gulf oil spill afterall!

December 27 2010 at 9:53 AM Report abuse +1 rate up rate down Reply