Bush win will not quell oil price fears

THE victory of US President George W Bush will do nothing to defuse concerns about oil prices experts have warned.

Their views proved correct yesterday as the price of oil climbed above $50 per barrel before the election result was declared.

More pragmatic issues, however, helped to push prices below $50 a barrel in afternoon trading.

Certainty about the election helped, but a fresh jump in US crude oil stocks offset the medium-term impact of a Bush victory.

In the afternoon, US light crude was down seven cents at $49.55, having peaked at $51.20 in Asia overnight. Brent crude was up 10 cents at $46.65 a barrel.

Prices tumbled after the US government’s Energy Information Administration reported that crude oil supplies rose 6.3 million barrels to 289.7 million last week.

But Niall Dunne, economist with Ulster Bank markets believes oil price pressure is here to stay.

Overall world demand is rising, with China evolving as a huge burden on demand in the years ahead.

While authorities raised interest rates last week to curb expansion, Mr Dunne said the bottom line is that the globe’s appetite for energy is continuing to grow.

Another factor that he believes will keep oil prices high is that Mr Bush is unlikely to release any of the long-term oil reserves held in the US.

Crude supplies have risen by over 10 million barrels in the past two weeks as the US recovers from Hurricane Ivan, which tore into the oil-producing Gulf of Mexico in September.

Global supplies have also been boosted by the highest OPEC output in 25 years and by improved supplies from Iraq over the past two months.

Traders said Mr Bush was likely to continue filling US emergency oil stockpiles and could stoke nerves about US policy in the Middle East, particularly OPEC’s second-biggest producer, Iran.

Mr Dunne believes, however, that instability in Iraq and increasing demand for energy will see the price of oil between $40pb and $50pb once the dust settles on the election.