Oil Prices Soar as US Crude Inventory Falls

The US Crude Inventories have hit a low, sending gas prices soaring nationwide. The supply of oil has been low because of bad weather conditions in the gulf of Mexico, leading Mexico to stop operations in some offshore oil fields. Since the US and Canada share oil resources based on their NAFTA agreement, Canada has seen a super hike in Oil prices over the last one week, hitting a high of CA$1.7 per gallon this week. Gas suppliers base their prices on the anticipated prices at which they will receive their supplies rather than at what they bought their supplies in the last day or week. The consumers thus end up paying more for gas even though it may have been bought at the same price as last week or last month.

Crude Oil worldwide has seen a huge demand. In 2008, China has already seen a growth of almost 30% in automobile sales as compared to last year. With mega economies like China and India, even though the United States is the worlds biggest Oil consumer, these new economies are due to overtake the US Oil consumption in the next decade.

China has seen unprecedented growth in the last few years. More people are moving towards a more modern life and buying cars to live a new lifestyle dictated by its new growth.

Gas prices in general are expected to rise in the summer months with increased demand as consumers all over the nation are expected to drive more. Even though it is reported that Oil will go back to less than $100 a barrel y the end of the second quarter of 2008, it maybe speculative news to keep consumers hopeful. Oil is trading at $115.89 as of April 18, 2008. This is approximately 30% higher than the average price of a barrel in 2007.