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Global crude oil prices have been rising sharply recently, fueling fears that they will spiral out of control. There are even forecasts that crude prices may soar to more than US$80 a barrel if the global economy picks up during the second half of this year, while speculators flock to the commodities market to make quick profits. If that happens, Korea will see its trade balance worsen, delaying economic recovery.
International crude prices, which surged to $140 a barrel in July of last year, have plummeted due to the global economic slump and stabilized to $30 to $40 per barrel last month. But starting early this month, oil prices have risen past the $50 level per barrel. As of Tuesday, Dubai crude prices stood at $50.22 a barrel, while Texas crude was $53.52. The main reasons behind this surge are expectations of global economic recovery, a recent bounce in stock markets, and increased demand for crude due to a weaker dollar.
Another factor driving crude prices higher was the massive economic stimulus announcements by the U.S. government, including the purchase of $300 billion in treasury bonds and plans to mop up $1 trillion worth of insolvent assets. As the dollar weakened against other major currencies on inflationary fears, investors are also turning their attention to the international spot markets, including the oil markets. According to the Korea National Oil Corporation, speculative investors, who were net sellers of 6.02 million barrels of crude oil futures on Mar. 10, turned into net buyers of 13.51 million barrels of oil on Mar. 17. They are bolstering their positions due to forecasts that global crude prices will rise further.
Tom Knight, a trader at U.S. Truman Arnold, said the weak dollar is driving crude prices up and stoking inflationary fears. It remains unclear how much more global crude prices will rise. Analysts expect crude prices to surge to more than $70 a barrel during the summer peak demand season.
(englishnews@chosun.com )
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