Crude Oil Rises to $84.92, Analysts Debate the Cause

October 11 00:00 2011

New York, October 11 ( – The crude oil has been on a rally recently. In the past week the price of crude has risen by $10 per barrel to reach a high of $84.92. This has come as a huge sigh of relief for the volatile oil industry as prices were down from the $115 mark in May to $70 mark recently. However, analysts are debating whether this is a good thing or not and what has caused it.

One group of analysts say that this price rise reflects the optimism that market conditions are going to improve given the recent Franco-German pledge. Two of the strongest economies of Europe have pledged to get the continent out of trouble. The oil industry therefore perceives that the demand drop it was anticipating will not be there. Thus prices are rising.

A second group is arguing that this is purely due to the fact that both the European Central Bank and Bank Of England have recently announced massive bailouts. Thus they are printing much more currency without any increase in the real assets backing it. Thus each dollar, euro and pound has become less valuable. The price rise just reflects the fall in the value of currencies.