Oil falls 2% to $83 a barrel
The price of crude oil fell to $83 a barrel today with news of an increase in US crude stocks and weak demand in the US market place. This will come as a welcome relief to the UK government as the threat of inflation has been spearheaded by the rise in the price of oil over the last few months. However, the International Energy Agency is still forecasting a significant increase in oil demand in the latter part of 2010.
At this moment in time a subdued oil price will be welcomed by many governments around the world as they attempt to head off the threat of inflation. However, as the International Energy Agency is predicting it is likely we will see an increase in demand for oil in the latter part of 2010, which could yet derail economic recovery around the world. A number of analysts believe that the oil markets are consolidating at the moment waiting for future direction as to the levels of supply and demand in the short to medium term.
The threat of inflation has been cited by the Bank of England as a possible issue in the short to medium term and indeed the UK government would be keen to avoid such a situation. So what does the future hold?
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