Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Money: Oil gets pumped up

Saturday 25 December 1999 19:02 EST
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

AS AN investment opportunity, oil hardly boasts the glamour of a telecoms stock or an internet venture, writes Dan Gledhill. Yet anyone forking out $10 for a bargain barrel of Brent Crude at the start of the year would have enjoyed a 150 per cent return in the past 12 months. And all because of a rare outbreak of harmony within the Organisation of Petroleum Exporting Countries.

The situation that greeted Opec at the start of the year was doleful. A combination of warm winters and Asia's recession meant demand was unable to match Opec's record production levels. The obvious solution - to agree a cut in output quotas - had traditionally been scuppered by the mutual suspicion among Opec members that their rivals would not keep their word.

But the threat of a sub-$10 barrel of crude, which would have bankrupted Opec, concentrated minds and output reductions were agreed that to date have been well observed. This uncharacteristic obedience, coinciding with Asia's economic recovery, has been rewarded by such a large rally in the price of crude that it has more than offset the 70 per cent output cuts.

Nevertheless, no one seems to think the rally can continue. Oil inventories are at historically low levels. Any lower and there could be a serious shortage of oil in the event of a sudden cold snap or other shock. A resumption of internal strife within Opec could mean quota-busting begins even sooner.

That is not to say crude's rally has reached its peak. While national reserves of oil have been run down, industrial users have been stockpiling the black stuff in the fear of a millennium glitch - although this may not be enough to prevent an oil drought in early January.

But for anyone harbouring millennium paranoia, there is only one place to put your cash, and it isn't the internet.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in