Even if oil has stalled, gasoline prices probably won't plunge, experts say. Drivers haven't yet felt the full effect of oil's latest surge, and pump prices usually decline more slowly than they increase.James L. Williams, energy economist at London, Jay Hawk Resources, believes that worldwide oil supplies are precariously balanced compared with rising demand. Still, he thinks crude prices should be near the $100-a-barrel mark.
Jay Hawk Resources LLC said he wasn't sure whether the oil market's recent dips were proof that the bubble had burst. But, Williams said, "I think that somebody's pushing a pin in the side of the balloon."One force helping to tamp down oil prices is the economy. Sharply higher fuel prices have forced consumers to cut back, reducing fuel consumption, and triggered price surges for grocery items and anything else delivered to stores by train or truck. Those factors have loomed large in an economy already weakened by the nation's housing crisis.
Another has been a slight rebound in the strength of the dollar. A series of interest rate cuts had devalued the dollar relative to other currencies, a strategy that sent investors into oil markets as an inflation hedge and pushed up oil prices because the commodity is traded in dollars. On Tuesday, the dollar strengthened after Federal Reserve Chairman Ben S. Bernanke said further interest rate cuts were unlikely.
Finally, there is growing pressure to rein in what critics have called excessive speculation in oil markets, including the shift to using less-regulated electronic trading markets, and the growing move of pension funds into commodities indexes. Congress on Tuesday held another in a string of hearings on the issue, and lawmakers have threatened to stiffen trading rules.
Stephen Schork, editor of a newsletter that tracks oil markets, said recent action in the crude markets "is giving all the telltale signs that the bubble has burst."He cited a recent spate of news that might have sent oil prices soaring, but didn't: a large reduction in oil inventories last week and a series of better-than-expected economic reports. "Now this market seems to be ignoring that kind of bullish news," he said.
Analysts have cited mounting evidence that demand for oil was easing. They also noted that Asian countries, which have led growth in fuel consumption, are starting to cut costly subsidies that have sheltered consumers from high prices.
Indonesia, Sri Lanka and Taiwan already have announced cuts to subsidies, while Malaysia said it would scrap fuel price controls in August in a move that could double pump prices.
India was also expected to raise fuel prices. The head of the International Energy Agency (IEA) told Reuters on Monday that world oil demand was shrinking more quickly than first thought and the IEA might cut its demand growth forecasts further.
More evidence on the state of supply and demand will emerge with the release of U.S. weekly stocks data on Wednesday. A Reuters poll showed analysts expected U.S. crude oil inventories would have risen by 800,000 barrels last week, gasoline stocks up by 400,000 barrels and distillates up 1.4 million barrels.
With oil prices at historic highs, China is moving full steam ahead with a controversial process to turn its vast coal reserves into barrels of oil. Known as coal-to-liquid (CTL), the process is reviled by environmentalists who say it causes excessive greenhouse gases.Yet the possibility of obtaining oil from coal and being fuel self-sufficient is enticing to coal-rich countries seeking to secure their energy supply in an age of increased debate about how long the world's oil reserves can continue to meet demand.
Jay Hawk Resources Llc Company has embarked in a drilling program consisting of four wells located in the Fulton Beach area in the state of Texas.
Discovered in 1947, Fulton Beach Field has been developed sporadically since that time. The area is part of a huge barrier island complex in the Miocene and Frio formations.
From and investment perspective, the area has cumulatively produced an estimated 342 billion cubic feet of gas and 36 million barrels of oil.
Opportunities in this fertile field are created by technological advances and new recovery techniques not available to earlier prospectors.
JayHawkResourcellcs has explored this opportunity in great detail and is confident that the potential rewards make for a sound investment.