Oil has made several runs at $100, but generally it retreats fairly quickly. Not that instance. According to The New York Times,” oil held firm above $96 a barrel on Monday, heading for its biggest annual gain that decade as growing geopolitical concerns and dwindling consumer nation stockpiles outweighed the risk of a softening U.S. economy.”

What is surprising is that events in Pakistan and Turkey are not likely to effect oil supplies by much, whether at all. The news from these regions is having more of a “psychological” affect on trading much as a break in a Canadian pipeline did two months ago.

The failure of oil to retreat may be based on the fact that one crucial interruption in supply from Nigeria, Venezuela, Saudi Arabia, or any other country subject to instability, could push

oil higher than $100 coupled with rising demand from countries like the US and China.

That is what is odd about the current situation in the price of oil. generally when the price of a commodity rises 30% to 40% in a short period, demand falls quickly. But, for the date being, there is little that the large oil-consuming nations can do about cutting their need for crude. It is one of the major ingredients for GDP growth.

So, world oil prices now face the most dangerous of combinations. There could be a really large supply interruption at any instance, but demand rises every year.

Douglas A. McIntyre is an editor at 247wallst.com.

Original post by Douglas McIntyre

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