WEST PALM BEACH, FL (www.hedgeco.net) – The price of crude oil continues to rise amid speculations that within a few short years there would be a scarcity of the commodity around the world. Recentlycrude oil traded around $66 dollars per barrel range. According to a London based hedge fund manager, the increases in crude oil prices have become inevitable.
According to Ashok Shah, the Chief investment officer at London & Capita,l the demand for crude oil may grow by about 2 to 3 million additional barrels per day, each year. Shah said, �Currently excess capacity at the moment is only 2 million barrels a day.� Explaining further, �Hedge funds are only accelerating a process that is unavoidable … They are basically the new vigilantes in financial and commodity markets.”
Crude oil prices continue to rise following the World Trade Center attacks and the Iraqi invasion. Oil analysts also think the growing economies of Asia, particularly those of China and India have also resulted in significant demand for energy. The growth in those nations and others will likely intensify in the coming years, thereby supporting expectations that energy shortages may unfold in the not so distant future.
Hedge funds for the most part continue to purchase more positions in the crude oil commodity markets with the expectation that crude prices will appreciate further. Although hedge funds have been accused of helping to push crude oil prices further up, analysts believe the reason why crude oil continues to rise has more to do with global supply and demand. High demand of crude oil will continue to put pressure on the global supply and inventory levels.
Shah added, “The fundamental driver of oil prices is the demand determined by strong global growth.” He explained further, �As a result, the gap between demand and supply is testing historic lows, it creates the conditions that are necessary for exaggerated price movements. This increased volatility is what hedge funds thrive on.”
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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