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                        Price of Oil Hits $100 a Barrel

   by Joe DeCapua

   The price for a barrel of oil rose above 100 dollars Friday amid
   concerns over instability in Libya and South Sudan, plus a growing U.S.
   demand for fuel.
   Fighting in South Sudan and erratic oil production in Libya are having
   a ripple effect on the global oil market.
   John Kingston, director of news for Platts, a leading energy
   information company, said, "The big, broad, fundamental picture does
   look like there's more oil on the world [market] than is necessary. But
   you continue to have several hotspots that are keeping the market tight
   and keeping the market a little bit on edge. Libyan output's been
   fluctuating. Sometimes it gets almost up to 500,000 barrels a day.
   Sometimes it's closer to 100,000 barrels a day. But this is a country
   that should be producing about 1.5 -1.6-million barrels a day. Now
   you've got South Sudan, which is a relatively small producer, but again
   it could be a cutback in a market that does have a lot of these
   geo-political concerns."
   Some of the fighting in South Sudan is in Unity State, which produces
   about 45,000 to 50,000 barrels a day. That's out of a total output for
   South Sudan of 250,000 barrels a day. Kingston said that's a relatively
   small output compared to other oil producing nations. Nevertheless, he
   said the combination of problems in the two countries has affected the
   market.
   "You've also got other things," he said, "You've got rising interest
   rates, which tend to be a booster of commodities. U.S. demand is
   starting to show real signs of strength. It's up about a million
   barrels a day - year on year - and the estimates now are that fourth
   quarter growth in GDP might be three to four percent, which is pretty
   strong. So, you throw all these together in this plunging market that
   everyone was talking about a few weeks ago, a month ago, it's got too
   many things that are preventing it from plunging."
   Kingston said that the oil market is not like the stock market, which
   can fluctuate wildly upon hearing rumors.
   "Any kind of commodity market - the net gain at the end of the day is
   zero. For every dollar made there's a dollar lost. So that's not the
   case in Wall Street. So, that's why I always push back very hard in any
   kind of analogy to Wall Street. But certainly it's not so much that
   there are rumors, there are real outages of supply. And even though if
   you sat down and did the percentages it would look really, really
   small, the fact is markets are not set by percentages they're set on
   the margin. What is the competition for that last barrel of oil?"
   Kingston said that Platts will not predict how long the price of a
   barrel of oil may hover around the 100 dollar level.
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   [1]http://www.voanews.com/content/africa-oil-27dec13/1818795.html

References

   1. http://www.voanews.com/content/africa-oil-27dec13/1818795.html