Crude Oil Prices Rise Amid Dwindling Inventories, 09/19/08

After remaining well above $100/barrel for over six months, crude oil prices returned to triple-digits briefly before ending the day at $97.88. Recent hurricanes that battered the Gulf Coast region of the United States and caused major disruptions in oil production have caused oil companies to dip into their reserve inventories. This use of crude reserves has caused stockpiles to their lowest level in years. In response to short term fuel shortages, the government may appeal to the International Energy Agency to release emergency fuel stocks. The IEA is a group that works to coordinate the energy plans of 27 industrialized nations. However, even without emergency stocks from the IEA, fuel shortages may be covered by refineries who are exporting surplus fuel supplies from Europe back to the United States. Other factors leading to the rise in the price of oil are the disruptions of oil production in Nigeria and the weakening of the American dollar against other world currencies.

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