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According to the news I saw earlier, oil prices have risen above $72 a barrel following the meeting of the producers’ cartel Opec last Wednesday. Opec decided not to change the amount of oil being produced by its members. The committee said that “there are signs that economic recovery is underway”, but added there was “great concern” about the pace of the recovery.
In fact the US light sweet crude rose 85 cents to $72.16 in Asian trading, as the euro continued to gain ground against the US dollar in currency markets.
The fact that oil is priced in dollars, so if the US currency falls, it becomes cheaper to buyers using other currencies. Since the market remains oversupplied and given the downside risks associated with the extremely fragile recovery, Opec once again agreed to leave current production levels unchanged for the time being. Oil prices have roughly doubled from their lows last December, but are half the levels reached earlier in 2008. Opec countries supply about 35% of the world’s crude oil.