Oil prices trading higher on US demand, $80 by year end?

Oil prices are trading higher on Tuesday with brent crude around $77 a barrel and light oil trading around $78. The oil price rise backs up predictions that the oil futures will rise in 2010. Analysts at investment bank Goldman Sachs are predicting it will reach $110 by the end of the year.

Figures later this week are expected to reveal that oil stocks in the US are falling, indicating demand is rising as the US economy recovers. Yesterday was the first day’s trading since Christmas Eve, when Brent crude closed at $76.31. The rise in price was despite thin trading, with many people still enjoying their Christmas break. The true direction of the oil price will only be tested once volumes return to their normal levels in the first week of January.

The key pressure on global oil prices is likely to come from demand from recovering Western countries and the emerging economies of China, India and Brazil. For the US, the key figures over the short term will come from the EIA, a section of the US Department of Energy, which is due to release figures on US oil stockpiles. Last week US stockpiles fell by 5m barrels, a sign that the giant’s economy is improving and that oil prices could be set to rise.

Although predictions on oil prices for 2010 vary, the concensus has a barrel oil ending 2010 comfortably above the $100 mark. The more immediate concern for oil traders is whether a barrel of oil will end 2009 above $80.

Tags:  2010, brent, light, oil prices, oil traders, trading